Hazel Blears: What we are trying to ensure is that people drink responsibly, and for 90 per cent. of the public that is exactly what they do. They have a good night out with their friends and do not cause trouble. Our policies are designed to target the minority who cause trouble in our town and city centres on a Friday and Saturday night. It is not about 24-hour drinking; it is about flexible licensing hours, which means that we can allow companies to be flexible as long as they are responsible and, most important, those decisions will now be made locally by local authorities, in touch with their communities and able to make the decisions in a properly responsible way.

Hazel Blears: The right hon. Gentleman raises an important point about the police using their powers to tackle under-age drinking and irresponsible drinking. He will be aware of the fact that we have had two major alcohol misuse enforcement campaigns—one in the summer utilised the new fixed-penalty notices that we have brought into effect. I think that 4,000 fixed-penalty notices were issued in the first alcohol misuse enforcement campaign. I am saying to the police that they need to use their powers, but that often it is better to use a fixed-penalty notice—an on-the-spot fine; a short, sharp shock—rather than simply a formal prosecution.

Hazel Blears: Yes, I am aware of the importance of that extremely distressing condition. That is why, as I said to my hon. Friend the Member for Stafford (Mr. Kidney), the alcohol harm reduction strategy involves not just the Home Office, but, crucially, the Department of Health, which is a joint sponsor of the strategy with us. Of course, I will continue to discuss these matters, together with the effects of chronic drinking, which is also a concern for us. We are now beginning to see people in hospital with liver diseases at any earlier age than ever before. Therefore, as well as binge drinking we also need to tackle chronic drinking.

Mark Oaten: The Minister will be aware that the fees paid by licensed premises have been restructured so that large, city drinking venues pay more, quite rightly, but will she explain why nightclubs have been excluded from the new regime? Is she aware that the industry claims on its website to have "played a blinder" in the negotiations with the Government by avoiding paying the new fee? Surely it is not just pubs that cause problems on Friday and Saturday nights—many of the problems relate to nightclubs. Why have they been excluded from the new fee arrangement?

Crime Reduction Partnerships

Charles Clarke: I commend the neighbourhood watch scheme on its important work. However, the hon. Gentleman put his finger on the issue in the way in which he asked his question. He listed a range of organisations that are doing absolutely excellent work in the field. Sometimes, the organisations work in parallel with each other, and sometimes, there is even an element of competition. We want to ensure that they can work together, which is why a major conference is being held at the end of the week to try to get an agreement on how we can achieve joint working in such areas. Each of the initiatives is an attempt to increase community involvement in fighting crime which, as the hon. Gentleman implied in his question, is absolutely within the thrust of the entire approach on crime and disorder reduction partnerships that we have followed.

Fiona Mactaggart: The evidence is contained in the fact that of those who have applied for licences, almost 1,000 have had their applications refused. People must undergo proper training and a Criminal Records Bureau check before acquiring a licence. As the new Act rolls out, the uptake of training is increasing because more door supervisors are applying for it. We can deliver something that my hon. Friend has campaigned for determinedly in Scotland and drive out the connections with organised crime and criminality that have sometimes existed in the door supervision industry.

Des Browne: In 2004, there were 51,300 cases—that is 62,700 people including dependants—of people who had been refused asylum or lost an appeal. Of that specific number, 3,500 principal applicants have so far been removed—that is 4,100 people including dependants—and others of course will have left the country without informing the authorities. As we do not have embarkation controls, it is not possible to determine whether that has happened. E-borders and identity cards will enable us to monitor that far more precisely in the future.

Des Browne: I am grateful to the hon. Gentleman for the manner in which he asked his supplementary question. He identifies one of a number of problems with the removal of failed asylum seekers. There are, for example, administrative difficulties involving certain countries in redocumenting their citizens. There was a practice until November, which was accepted across the House, of not removing people, or enforcing the removal of people, to Zimbabwe. I think that hon. Members will know that there is a direct correlation between our ability to be able forcibly to remove asylum seekers and the intake from certain countries. The hon. Gentleman is right to identify the question of redocumentation as being the principal concern. That is why, in the 2004 Act, we criminalised the deliberate destruction of documents. We have been prosecuting people for that in significant numbers. The number of those who have been arriving at ports inadequately documented, since the introduction of the 2004 legislation in October, has been reduced by 50 per cent.

Tony Baldry: Does the Minister accept that there is cross-party disgust for any racist treatment of asylum seekers, refugees or migrants? Following on from the question of the hon. Member for Leicester, East (Keith Vaz), will the hon. Gentleman confirm that if Global Solutions is found to be wanting in Mr. Shaw's independent inquiry, the Home Office will consider suspending its contracts? The company has already been subject to an independent inquiry into the burning down of Yarl's Wood. It does not help to inspire any confidence in my constituents in and around Bicester that it is a fit and proper company to run an accommodation centre for asylum seekers when they see on their televisions refugees being treated so appallingly.

Des Browne: I am grateful to the hon. Gentleman for his question. I accept that he speaks for all parties in the House in his condemnation of racism. I have made it clear that racism has no part anywhere in our society, and particularly not in the immigration system. Detention and removal is an essential part of an effective immigration control system, but it must be carried out with humanity and dignity and in accordance with our laws, especially those laws designed to protect people from racial discrimination.
	The point that the hon. Gentleman makes about our continued relationship with GSL will have to be considered in the light of the report from Stephen Shaw. GSL is a successful company in managing and carrying out many contracts with the Government. Until Stephen Shaw reports, I am sure that the hon. Gentleman will accept that it would not be appropriate for me to comment any further.

Ann Cryer: How many immigrants with permission for permanent settlement on the ground of marriage have been removed due to not staying within the marriage for two years? I ask the question because my constituents—the women concerned—are told that they have become third parties and, therefore, cannot gain information.

Sally Keeble: I welcome my hon. Friend's reply and would be grateful if he could provide a constituency breakdown of those figures and placed it in the Library. Is he aware that the head of the Government's antisocial behaviour unit recently came to Northampton and received a warm welcome from people in Thorplands, who were keen that action should be taken to deal with antisocial behaviour in their area? What is his Department doing to make sure that there is a consistent application of the new powers by local authorities and police forces, and will it make sure that all areas take up those powers and use the orders, giving local communities the benefit of the peace and security to which they are entitled?

Paul Goggins: I am grateful to my hon. Friend for her warm welcome, and I am pleased that the Home Office and the authorities in her local area are working well together. That occurs throughout the country—positive relationships are developing. One Home Office initiative is the Together campaign academy, which has made sure that 6,500 local officials are fully trained and know what powers they can use to ensure that antisocial behaviour legislation works in practice. It is one thing to issue an order, but it is another to make sure that it is properly enforced. It is vital that the message goes out—these are serious powers and they need to be used to deal with this serious problem.

Paul Goggins: I do not know whether to take "stunning" or "complacent" as the most important adjective to describe my performance. Let me leave the hon. Gentleman in no doubt whatever. This is an important issue for our communities throughout the country. We know, as Members of Parliament, that it is a serious issue. The Government have put in place the powers and the resources to deal with it. We are dealing with it. People recognise the difference that the antisocial behaviour legislation is making and the action that goes with it is improving our local communities. It is about time the hon. Gentleman got behind the campaign, instead of criticising it.

Caroline Flint: We are targeting class A drug traffickers at every stage of the supply line, from source to street.We are creating the Serious Organised Crime Agency to bring a new focus to tackling drugs trafficking and other forms of organised crime. We are also providing new powers for the law enforcement authorities, including the power to compel individuals to co-operate with investigators, in addition to existing powers to shut down crack houses and seize criminal assets, both of which, I am pleased to say, are proving effective.

Tom Levitt: I am sure that my hon. Friend would wish to join me in congratulating Chief Superintendent Flint and B division of Derbyshire constabulary on two big drugs raids recently, which resulted in the seizure of more than £1 million worth of drugs plus other assets, and over a dozen arrests in two towns in High Peak, New Mills and Glossop. Those arrests would not have been possible without, first, the information coming from members of the public, and secondly, work not just by the police, but with other agencies as well. Can my hon. Friend describe how she will help to promote a joined-up approach across all agencies towards tackling drug trafficking? Caroline Flint: I am pleased to congratulate the force in my hon. Friend's area on significant operations with significant results. So far in 2004–05, Derbyshire police and prosecutors have obtained 63 confiscation orders with a total value of more than £2 million, and five cash forfeitures with a total value of more than £154,000, so I congratulate them on their success. My hon. Friend is right—it is about the agencies working together. From next year, all agencies involved in asset recovery will benefit from a new incentive scheme—50 per cent. of all the money recovered will be handed back to police and other agencies as a further incentive to recoup even more. We must make sure that we convict people and take away the profits of crime so that they cannot use them to fund their lifestyle or reinvest them in their criminal activities.

Caroline Flint: My hon. Friend has raised an important issue. Last week I was in Bulgaria and Romania, where I discussed issues related to organised crime, such as drug trafficking and people trafficking. My hon. Friend's question highlights how criminals launder money from their criminal activities through financial institutions or by purchasing property or land. Whether it be on a global level or through our influence in the European Union, we should encourage countries such as Bulgaria and Romania, which want to join the European Union, to make sure that their systems include effective legislation on money laundering. I congratulate Bulgaria on recently passing its asset recovery legislation, which follows the path set by the United States, the UK and Ireland.

Angela Watkinson: In Upminster, two separate shootings have occurred in the past week, and the police suspect that both of them relate to drug turf wars. Will the Minister reflect on that fact, and then will she reflect on the following: gun crime has doubled; this country is now known as the drug capital of Europe; and this Government's drug policy has been an abject failure?

Caroline Flint: Gun crime is very low in this country. It has increased in recent years, but the rate of increase has gone down, and the number of fatalities caused by handguns has decreased considerably—[Interruption.] There has been an increase in incidents involving imitations. The use of weapons by drug gangs raises some issues, which is why we launched Operation Crackdown this year. We have made sure that not only are drugs seized and drug dealers arrested, but firearms are taken away. For the hon. Lady's information, in the first four weeks of Operation Crackdown, the 33 forces taking part arrested nearly 1,000 people for class A drug supply, closed 42 crack houses and seized nearly £1 million in suspected drug cash, 71 firearms and 86 replicas. We are taking a joined-up approach to that serious matter, and although we are not complacent, we are making progress.

Fiona Mactaggart: My hon. Friend is right to highlight the issue. We want to ensure that, in the words of Lord Scarman 25 years ago, beat officers should be seen
	"not as occupying the bottom of the police pecking order . . . but at its apex, in the forefront of the police team".
	The development of a career pathway has been made more achievable through the development of teams of community support officers, which gives neighbourhood police sergeants and constables the chance to lead a team. Those are some of the ways in which we are developing a career pathway at neighbourhood level. I know that that is much wanted in my hon. Friend's constituency, because that is what I was told when I met a group of community support officers in Broxstowe last year.

Fiona Mactaggart: It certainly can be. Within our current promotion and retention strategies, there is an opportunity to provide special priority payments and other mechanisms to enable police officers to stay in the front line in the community. North Wales police authority and Devon and Cornwall police authority have already used those structures to enable officers who are committed to being in the front line in the community for two or three years to receive additional payments in recognition of their work.

Caroline Flint: We certainly do not support the burglar. That is emphasised by the fact that the number of burglaries has gone down. We are getting a clear message across to the people who would enter our homes to steal from us that they will be caught and dealt with. We have looked at improvements in this area, including introducing a minimum sentence of three years for those convicted of domestic burglary for a third time. The reason that we did not support the hon. Gentleman's Bill is very simple: it became clear, after consultation with a wide group of people, that what was needed was to ensure that people understood the law as it stood. That goes both for the public and for the burglars.

John Healey: I beg to move, That the Bill be now read the Third time.
	I am pleased to open this debate on the Bill, which rewrites our legislation on the taxation of trading, property and savings and investment income. The Bill has been produced by the Inland Revenue tax law rewrite project, which is a long-term undertaking to rewrite our direct tax legislation so that it is clearer and easier to use. This is the second rewrite Bill to venture into the realms of income tax and it does so in a significant way, by tackling schedules A, D and F in the current legislation. About 20 million people receive income of one variety or another that is taxable under these schedules.
	Before I say more about the specifics of the Bill, it might be appropriate to remind the House of the work of the tax law rewrite project. The project was set up in 1996 by the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke). It is a project to rewrite the UK direct tax code, the provisions of which have been enacted over at least the past two centuries. The principal aim of the project is that the rewritten legislation should be accepted by all the main users as clearer and easier to use. While making the legislation more accessible, the project also takes great care to preserve the effect of the present legislation, apart from minor agreed changes, and it proceeds through careful consultation and consensus. It is beyond the remit of the project to make any change in the main tax policies. However, the rewrite can encompass minor changes where they will improve the legislation. Examples of such changes are the inclusion of extra-statutory concessions, the repeal of obsolete material and the correction of small anomalies. The explanatory notes list 159 such changes in the Bill.
	In its consideration of the Bill, the Joint Committee focused in particular on the minor changes and satisfied itself, and reported to the House, that they were all within the remit of the project. It also heard that the project had dropped any proposed changes that did not meet the approval of its two external Committees. The Joint Committee noted the widespread public scrutiny of the Bill as a whole, and of the minor changes in particular, which were flagged up very clearly at each stage in the consultation process.
	In the run-up to the Bill, 18 separate consultation papers were published, and the Bill was published in draft form last March. All were published for public consultation. In addition, a response document summarising the comments made on the draft Bill and setting out how the project has taken account of them was issued last September.
	Of course, consultation does not stop with formal papers. The project continues to consider other ways to involve users of tax legislation and keeping them informed so, over the last two years, the project has made much more use of its website to publish work in progress in the form of early drafts or changes to previously published work.
	It may be helpful if I say a few words about the content and approach of the Bill, which is the third of the tax law rewrite project. The charge to income tax is broken down into a number of schedules. Over the years, schedules have come and gone, but currently we have schedules A, D, and F. The Bill tackles income tax charged under those schedules. It brings the charging and calculation rules for the different sorts of income together in updated classifications, such as trading income, savings and investment income, and property income. Unlike current legislation, it integrates foreign income in the same parts as equivalent United Kingdom income, confining any special rules that apply to foreign income to a different part.
	The Bill applies for income tax only. The project consulted at an early stage on whether to aim for separation of the income tax code from the corporation tax code. Users of the legislation favour making this separation, so where the legislation rewritten in this Bill currently applies to both codes, the current provisions will be repealed for income tax purposes, but will continue to apply for corporation tax.
	The Joint Committee heard that this Bill is the first step in the separation of the income and corporation tax codes. The project will consult further on the extent to which corporation tax provisions should be rewritten in full or should cross-refer to income tax Acts.
	Various techniques have been used in the Bill to make the legislation clearer and more accessible. The first and most important element is the imposition of a coherent structure. Instead of the haphazard order of provisions in the existing legislation, the Bill presents all the material in a logical way, with linked topics grouped together.
	The Bill also contains plenty of aids to the reader, such as introductory scene-setting chapters and signposts to other relevant provisions. These are designed to help readers to find their way through what is, inevitably, a large body of legislation. Other features of the rewrite process include shorter sentences, modern language, more consistent definitions and greater use of other reader aids such as formulae, tables and method statements. All this combines to make a new style of tax law that is more accessible and altogether more user-friendly.
	The project continues to enjoy the strong support of users of the legislation and I am also happy to say that it continues to command strong support from both sides of the House. I pay tribute to Members of the House and of the other place who have played a part in the scrutiny of the provisions to date. The comments made by the representative bodies confirm that this latest Bill from the project has indeed been well received. The Institute of Chartered Accountants in England and Wales said that the Bill, as published in draft last spring,
	"is well constructed and we commend its drafting. It covers important ground and . . . facilitates taxpayers' easier understanding of legislation which will affect very many of them, it is a useful addition to the rewritten legislation."
	The Chartered Institute of Taxation said:
	"we recognise and commend the huge amount of detailed work that has gone into the production of this Bill . . . please extend our congratulations to the entire Project for what is on balance a mammoth and an excellent product."
	To sum up, this is an immensely worthwhile project that modernises our direct tax legislation, making it clearer and easier to use. This, the second income tax Bill, is another major milestone in the work of the tax law rewrite project. Work remains to be done to complete the rewrite of income tax, but the Bill is a demonstration of significant further progress and it maintains the project's excellent track record on improving current legislation. I commend it to the House.

George Osborne: As I said on Second Reading, the Conservative party very much welcomes the latest product of the tax law rewrite project, which, as the Economic Secretary said, was set up by the previous Conservative Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). Anything that reduces the impact of the taxes that we impose on taxpayers, certainly in a regulatory sense, is welcome.
	I cannot resist welcoming the Liberal Democrat presence, as it was completely absent from Second Reading, as the Minister might remember, which is strange given that the Liberal Democrats are particularly fond of income tax and want to increase the top rate, introduce a regional income tax, local income tax and so on. Under the Liberal Democrats, we would therefore have a lot more tax and a lot less income. Nevertheless, I welcome the hon. Member for Twickenham (Dr. Cable) to his place for Third Reading.
	The Economic Secretary mentioned in his short speech the history of income tax and that it was set up at the end of the 18th century to pay for the war with France. At the time, it provoked an outcry in the House of Commons. Charles James Fox, no doubt speaking from this side of the House at the time, said that income tax
	"tends to the immediate destruction of"
	the taxpayer's
	"trade, the annihilation of their fortunes, and possibly to the loss of liberty of their persons".
	William Pitt had personally designed the new tax system in his combined role of Prime Minister and Chancellor—an arrangement that I am sure that the current Prime Minister would look on with envy—to stabilise the country's finances. I wonder what would happen were Fox and Pitt to glimpse at our proceedings today in this near-empty Chamber as we remove from the statute books what remains of the schedule structure of the Income Tax Act of 1803. We are witnessing a little bit of history. As someone who studied history at university, I think it is worth mentioning that.
	Of course, the Bill also separates income tax and corporation tax law for the first time since corporation tax was introduced in 1965. That will have a significant impact on 20 million taxpayers, 5.7 million recipients of tax credits and 47,900 tax practitioners, as well as on the £22 billion of revenue collected by the taxes represented in this legislation. The fact that we can pass this Bill, with its 886 clauses, with some confidence that it only makes our direct tax law simpler, more consistent and easier to use, and is not being used as a stealthy tax-raising measure is down entirely to the heroic work of the three committees that oversee the rewrite project mentioned by the Economic Secretary.
	The first of those is the Joint Committee of both Houses, which scrutinises the Bill to make sure that the letter but not the spirit of the law is being rewritten. Like the Economic Secretary, I pay tribute to my right hon. and learned Friend the Member for Rushcliffe for chairing that Committee. It is appropriate that he stays involved as the Chancellor who established the tax law rewrite project nine years ago. When it met last month, the Committee concluded that it was satisfied that
	"the only changes that the Bill makes to the existing law are of such minor significance that they need not be referred to the attention of Parliament."
	I am grateful for its work. I have read the proceedings and it is clear that it grilled the officials involved. Clearly, while I suspect that the Chancellor of the Exchequer is desperate to increase income tax revenues to fill his black hole, this Bill will not be his way of doing it.
	Another important check on the process is the steering committee. I pay tribute to another former Chancellor, who chairs it—Lord Howe of Aberavon, who also sits on the Joint Committee. Lord Howe is a driving force behind the tax law rewrite project, and the Economic Secretary and I can attest to his personal interest in the Committee proceedings, as he sat in the public seats upstairs to listen to us, which is probably the first time that a former Chancellor has done so. His presence was very welcome.
	I also thank my right hon. Friend the Member for Fylde (Mr. Jack) for his work on the steering committee. As I said on Second Reading, the whole project seems to be aimed at establishing a retirement home for former Treasury Ministers. I repeat my offer to appoint the Economic Secretary to it on 6 May.

George Osborne: No doubt the hon. Gentleman is looking forward to his own lengthy contribution to the debate. I am sorry that he has moved back to his usual place in the Chamber, because I thought for a second that he had been promoted to the post of the Minister's parliamentary private secretary—that he had finally reached the first rung of the ladder—but, sadly, he seems to have fallen to the ground. I think that I have advised him before to make more helpful interventions on Ministers' speeches if he wants to get on in life.
	I also thank the consultative committee: representatives of lawyers, accountants and other tax practitioners and, indeed, representatives of the taxpayers such as the Confederation of British Industry, the Institute of Directors, the Federation of Small Businesses and the London chamber of commerce. Theirs is detailed work. Those representatives are in the front line in dealing with the complexity and obscurity of tax laws that we pass here and I thank them for their help in trying to make legislation clearer and simpler.
	Let me now deal with the substance of the Bill and specific issues. If the Minister does not wish to intervene, perhaps he will write to me if he thinks he could respond to any points that I raise.
	The Minister mentioned the integration of foreign with United Kingdom income tax rules. That is, I think, one of the most welcome features of the Bill. Perhaps the Minister will now consider introducing a single tax form for foreign and UK income. A question was asked about that in the Joint Committee. I know that it is beyond the remit of the rewriting team, but it is very much within the Minister's remit. It might be of practical benefit to the whole rewriting process if people could fill in just one form.
	Clause 882, which was also discussed in the Joint Committee, gives the Treasury power to alter the legislation by an order that is subject only to a negative resolution, rather than the affirmative procedure that we would expect. The issue was also considered by the Delegated Powers and Regulatory Reform Committee in the House of Lords. I understand why the power is necessary—technical changes may be needed to correct any mistakes or omissions in this complex legislation—but will the Minister now repeat his assurance to the Joint Committee that he, or other Treasury Ministers, would make such orders only after securing the agreement of the consultative and steering committees? That is, I feel, an important check.
	Appendix 4 of the memorandum submitted by the Inland Revenue to the Joint Committee indicated that there were some extra-statutory concessions that had not been written, or rewritten, into the legislation. The reason given by the Revenue was that they were too complex. They include fairly important matters such as directors' fees, the profits and losses of theatre backers, compensation for the compulsory slaughter of farm animals, and wear and tear on furniture and the like in furnished lettings.
	I know that the tax law rewrite team gave detailed consideration to what might be done in those areas, but decided that it could not make any great improvement—or that it was not worth trying to do so. Is the Minister satisfied with that conclusion? It seems a shame to leave some particularly complex parts of the law unrewritten just because they are particularly complex. Perhaps once the whole body of direct taxation has been rewritten, the rewrite team will look again at the bits that they have had to leave out. I know that there will only be a few, but it would be a shame just to leave them standing there, unrewritten.
	Other clauses affect the tax paid by individuals, both in theory and in practice. The Joint Committee looked in depth at the 43 changes that may lead to the payment of less or, indeed, more tax by an individual. Examples include clause 412, on stock dividends, clause 150, on securities held as circulating capital, and clause 666—a rather inauspiciously numbered clause—on beneficiaries' income from estates in administration. The Joint Committee satisfied itself that the changes are sufficiently obscure as to be very unlikely to have a significant impact and I am sure that it is right. However, as tax law develops and as the courts and the Revenue interpret it, one would not want individuals to end up paying more tax as a result of a rewrite. I hope that the Minister will assure me that, despite the Joint Committee's having satisfied itself on this matter, the Treasury will continue to keep an eye on it as the various rewrite laws bed in and new tax practice develops around them. We do not want taxpayers to pay an unfortunate price for what should be a very welcome process.
	I turn now to an issue that I raised on Second Reading, but which is worth airing again on Third Reading. The valuable work done through this process by the tax rewrite team will be completely pointless if it is to be undermined by subsequent legislation that is poorly drafted or inconsistent with the rewritten law's language, and which returns us to the very morass that the rewrite project is supposed to address. This is, as the Minister well knows, a real threat, because it has already happened. Large parts of the Income Tax (Earnings and Pensions) Act 2003 were superseded just a couple of months later by schedule 22 of that year's Finance Act, which was hideously complex, used language inconsistent with the rewritten tax law and, indeed, undermined the whole purpose of the rewrite project. That is the view not just of me but of the Inland Revenue itself. Indeed, its "Tax Law Rewrite: Plans for 2004/05" address this very point, saying:
	"One issue which gave rise to a considerable amount of comment and discussion during 2003–04 was raised by Schedule 22 to the Finance Act 2003 . . . Critics argued that the style and format of Schedule 22 compared unfavourably with the quality of legislation produced by the project; and that it was highly unfortunate that a substantial part of the second Tax Law Rewrite Act had to be replaced so quickly by new legislation that was perceived to be of lower quality . . . The topic received considerable public airing. It was also discussed on several occasions by the project's Committees . . . this is an issue that will no doubt stay with us—to some degree—and on which we must continue to work. It will be a priority in 2004–05 to keep this issue in front of us and to promote further discussion about how best to tackle it."
	I have quoted that passage at length because it is very important and it gets to the heart of the issue, which is whether this process is simply temporary or will bring about a real change in the way in which we produce tax law.
	When I raised this issue on Second Reading, the Minister conceded that I had made a fair point. He said that the Government were learning lessons from the debate and from the criticisms that were received of schedule 22. His excuse was that it is difficult to produce good-looking legislation when it needs to be produced to tackle such problems in a fairly short time and under pressure. Of course, he is right, in that parts of the Finance Bill are often produced in that way in order to deal with what the Government of the day would describe as "tax-avoidance schemes". But given that that is a normal process in Finance Bills, the Minister must surely look at a way of ingraining into the team currently writing tax law some of the principles and language used by the rewrite team. Otherwise, we will shortly find that—under perhaps Governments of either persuasion—much of the rewrite team's good work is undermined as bits of the tax law are superseded by hastily and poorly drafted new tax legislation. I ask the Minister to look again into that matter and see what can be done. The Inland Revenue said that it wanted to promote further discussion on how best to tackle the problem in 2004–05 and time is rapidly running out, so this is probably my last opportunity to make the point.

John Healey: There have been constructive and supportive comments from both Opposition parties. I appreciate the shadow Chief Secretary's welcome for the Bill. He described the project as a model for approaching the challenge of producing clearer, easier, more comprehensible and intelligible tax legislation. I welcome that. I am sure that the House appreciates the sense of history that the hon. Gentleman brought to the debate. Some might say, however, that he and his party are backward rather than forward looking—the party of the past still struggling to become the party of the future.
	May I tell the hon. Member for Twickenham (Dr. Cable) that, although it is not really my part to stand up for the shadow Chief Secretary, the hon. Member for Tatton was able to contribute to the debate for almost 20 minutes in large part because he and his colleagues have given rather more scrutiny to the content of the Bill and its progress through Parliament than the Liberal Democrats? Nevertheless, I welcome his general support for the Bill.
	I turn to three or four of the specific issues raised by the hon. Member for Tatton, albeit a debate on Third Reading. He talked about the need for a single tax form that would allow taxpayers to declare foreign and domestic sources of income. Especially under Her Majesty's Revenue and Customs, we will consider how to improve the process, particularly the forms that taxpayers must use, but a separate entry for foreign income is still likely to be needed because of double taxation relief, which is confined to foreign income.
	On clause 882, as the hon. Gentleman explained, the issue that he raised was one for the Bill's previous stages, both Second Reading and the consideration by the Joint Committee on Tax Law Rewrite Bills. The clause has been examined carefully during the Bill's progress to date and in the Joint Committee. It is designed to make technical changes. However, I am happy to confirm, as I did to the Joint Committee, that it is our intention and our undertaking to introduce regulations under that clause only with the agreement of the tax law rewrite project's steering committee.
	The hon. Gentleman believes that some issues may warrant the attention of the tax rewrite project in the future. Of course, such work is for future decision, but the project consults widely on the views about its future work, and I am sure that it will note the hon. Gentleman's comments.
	We have discussed schedule 22 before, but the value of such tax rewrite Bills is that they make it easier to fit in changes to tax legislation, while keeping the tax legislation clear in the future. New or amending tax legislation will generally be fitted into the draft structure and the style set out in the Bill. Schedule 22 was introduced in unfortunate circumstances—they were not ideal—and in large part to deal with a severe problem of tax avoidance, but I assure the hon. Gentleman and the House that we do our best to produce a good standard of legislation in Finance Bills and to maintain the style and structure established in such tax rewrite Bills, and we will continue to do so in succeeding Finance Bills.
	The Bill is a milestone in the work of the tax law rewrite project. There is widespread and well-deserved recognition of the work of all those involved in producing this income tax rewrite Bill, but in drawing this Third Reading debate to a close, I wish to pay tribute, in particular, to Lord Howe of Aberavon, who has chaired the steering committee, and to the steering committee, which overseas the project. There are representatives from the Labour party and from the Opposition—my hon. Friend the Member for Falkirk, West (Mr. Joyce) and the right hon. Member for Fylde (Mr. Jack).
	I pay tribute to the members of the consultative committee—a crucial part of the tax law rewrite project's structure that reviews the project's work and contains leading representatives of accountancy bodies, legal bodies and representatives of taxpayers, too. I welcome the contribution that many other individuals and bodies have made to the consultations. I also pay tribute to the right hon. and learned Member for Rushcliffe (Mr. Clarke), who started the project in 1996. He has maintained his commitment to it and has recently chaired the Joint Committee, as part of the Bill's scrutiny.
	Finally, the real work—the day-to-day, week-to-week and year-to-year work—is done by the project team. Dedicated, detailed work is undertaken with great care by Inland Revenue officials, led by Robin Martin, with great distinction. I pay tribute, as many others have, to the project's work and to his leadership. This is not a tax reforming Bill, nor a tax simplifying Bill, but it is, as hon. Members on both sides of the House have said, an important Bill. It will make things easier for everyone who uses tax legislation. I commend it to the House.
	Question put and agreed to.
	Bill accordingly read the Third time, and passed.

Stephen Timms: The Government are making such a firm commitment, and I am pleased that that is gathering support from other member states—six countries signed the letter containing the 1 per cent. aim. As I shall say in a moment, there is a clear indication that several other member states are moving in the direction of supporting our position on that.
	While we respect the Brussels agreement to press for a more liberalised and market-focused agricultural sector, including the reform of the sugar and dairy sectors, and support further modulation, we want to refocus the structural and cohesion funds of the lowest income member states within an over-arching framework agreed by all member states. Spending should be refocused within internal policies on a smaller number of initiatives with demonstrable added value, particularly research and development, freedom, security and justice. We also aim to improve the effectiveness of external actions in support of the EU and UK external objective—external to the EU—to which the millennium development goals are central, while retaining flexibility to cope with crises such as the tsunami if the need arises.
	The Commission has not as yet responded adequately to the challenge that those aims present. In its communications of February and July 2004, which are before the House today, the Commission proposed a total budget for 2007–13 of more than €1 trillion. That is a real-terms increase of 34 per cent. compared to the current financial perspective, with little justification being provided for such a large increase and little prioritisation between the different elements. For example, despite the fact that, with enlargement, the richest parts of the Union would become more than 10 times richer than the poorest, the Commission proposes that less than half of the structural and cohesion funds go to the new member states, where they would have the greatest effect.
	Despite our commitments at Monterey, the Commission proposes a regionally based policy approach to external actions—external to the EU—which would make it harder rather than easier to refocus the budget on low-income countries and the millennium development goals.

Adam Price: Does the Commission not propose to focus the vast majority of structural funding on the poorest regions within the EU, including those poor regions within relatively prosperous member states? It proposes that the vast majority of the funding go to the poorest regions within Europe overall.

Stephen Timms: My hon. Friend makes an important point. This is the 10th year in a row in which there has not been a satisfactory statement of assurance about the EU accounts. However, there has been progress in the right direction, particularly after the reforms that Neil Kinnock initiated when he was a commissioner. Since January this year, an accruals accounting system has been in place, and it is a welcome step forward. To be fair to the Commission, it managed to implement it much more quickly than was widely expected or than has been the case in the UK. From that point of view, there is evidence that the Commission is putting its house in order, but my hon. Friend is right that there is some way to go before people across Europe can be confident that member states' financial contributions are being used properly.

Richard Spring: I thank the Financial Secretary for his opening remarks and I share his concerns that
	"the Commission's overall proposals are unrealistic and unacceptable."
	However, this is an extremely important debate as it is not only the future nature of the European Union that is at stake, but the impact on Britain's public finances. Last year we paid £11.8 billion gross and £4.8 billion net after the £7 billion rebate. Even with the rebate, Britain has been a disproportionate contributor ever since we joined the European Community.
	The Government have problems with that already, without the European Commission's proposals which would increase the amount that the UK must contribute to the EU, even if the Government succeed in defending their own budget. I therefore commend the European Scrutiny Committee for recommending the debate. The Committee recognised the significance of the documents before us.
	The Committee tells us:
	"The new Financial Perspective for the EU will determine the overall revenue and expenditure of the EU and the expenditure on each category of EU activity for the seven years from 2007 to 2013. It will also largely determine the net contribution to the EU of each Member State, and the future of the UK's budget rebate. It will in practice be binding on the parties to it for those seven years. It is therefore one of the most crucial forthcoming EU decisions, with important consequences for enlargement and the draft constitutional treaty."
	Because of the importance of the issue, we encourage the Government
	"to adopt a robust negotiating position."
	The Government have been high on rhetoric on this issue in the past. In a similar debate in June last year, the Paymaster General described the message being conveyed to EU Foreign Ministers by the Chancellor of the Exchequer as "uncompromising". She claimed that the Chancellor
	"made it clear that, when each member state has to take tough decisions on spending and show fiscal discipline, it is unacceptable and unrealistic for the Commission to propose a 25 per cent. increase in its spending."—[Official Report, 15 June 2004; Vol. 422, c. 704.]
	Nine months later, however, the same proposals are on the table in a more advanced form. It is time for the Government to translate their rhetoric into action at the European Commission, which is why we want a robust negotiating position to be spelled out. Words are not enough, because the matter is extremely important from a financial point of view.
	To illustrate how little progress has been made—we seem to have travelled backwards since the issue was first debated in June last year—I shall briefly examine the history of EU financing. In the 1980s, tension between the two budgetary authorities within the Community, the European Parliament and the Council, disrupted the annual budgetary procedure, which led to a series of budget crises. The result was negotiations between the Community institutions, which led to the first financial perspective in 1988.
	The framework lays down a maximum ceiling for spending under different expenditure headings. The current financial perspective agenda 2000 covers the period from 2000 to 2006, so a new perspective is required. The European Union website states:
	"Since the European Union's public finances underwent major reform in 1988 and the financial perspective was created, there has been little change: the financial framework has simply been carried over with a few alterations to accommodate new priorities. It was time to start afresh and think hard about the Union's policies and the nature and number of instruments at its disposal".
	We do not doubt that logic.
	Since 1988, the EU has expanded, with the accession of 10 new member states on 1 May last year. Enlargement, a policy instigated by Baroness Thatcher and John Major, and, to their credit, continued by the current Government, was an historic moment. Like the Government, we object to the nature of the reforms proposed by the Commission. The Commission's first proposals were published in February 2004 in the Commission's communication, "Building our common future—policy challenges and budgetary means of the enlarged Union, 2007–2013", which was debated on the Floor of the House on 15 June last year.
	In "Building our common future", the Commission considers the enlargement of the Union, rather than proposing a reduction in the maximum size of the EU budget from 1.24 per cent. of gross EU income to 1 per cent., which is the figure that the Government and the Opposition want to see. The Commission proposes that the ceiling should remain at 1.24 per cent., and it cites commitments that have already been made, such as payments in the agricultural sector, cohesion policies in the accession states and accommodating Bulgaria and Romania, as an excuse.
	In June, the Paymaster General told us that the Commission's proposals were "politically unrealistic and unacceptable". She said:
	"It has failed to grasp the opportunity offered by the negotiation of a new financial perspective to increase the effectiveness and transparency of European Union expenditure and to consider how allocations within a limited EU budget can best be focused on adding value at the EU level, including underpinning the Lisbon strategy for European economic reform." —[Official Report, 15 June 2004; Vol. 422, c. 704.]
	We agreed. My hon. Friend the Member for Hertford and Stortford (Mr. Prisk) stated:
	"The Conservative party supports many of the stated aims of"
	that day's
	"motion, especially on limiting total spending and on the 'unrealistic and unacceptable' proposals for future spending priorities."—[Official Report, 15 June 2004; Vol. 422, c. 718.]
	We can, and do, oppose and improve on the Government's mistakes in the UK Parliament, but by definition, as the Opposition, we cannot formally oppose or improve the European Commission's proposals in Brussels.
	The Government promised that they would fight the Commission's proposals on EU financing:
	"It is the Government's strongly held view that the Commission's current proposals are not a basis for . . . negotiation. The Government are working with other member states that share many of our principles and areas of common interest".—[Official Report, 15 June 2004; Vol. 422, c. 712.]
	What was the outcome of that work? Were the proposals deemed to be not even a basis for negotiation, and scrapped? No—they have been built on. The Government were forced to admit that the Commission's new communication
	"fails to respond to the diversity of views held by Member States, including the group of six Member States, including the UK, that wrote to President Prodi calling for the budget to be stabilised at 1 per cent. of EU GNI. It also fails to recognise the need for reprioritisation, so that funds are redirected where they will have most effect."
	We now have four documents before us. Two are reports—one on the EU's financial perspective for 2007–13 and one on altering the own resources decision—but two go a step further than mere reports. They are draft proposals. The European Commission is proposing a clear programme for a change that goes against the grain of thinking in Britain and on both sides of the House. Is that what the Government mean by forward, not back? I hope not.
	I would like the Minister to explain. Now that we have actual proposals before us, rather than the less concrete plans of "Building our common future", how does the Commission intend to take those proposals forward? What room for negotiation is there in the proposals? How long is the period for negotiation likely to be? When does the Commission plan to issue what I hope will, by then, be substantially altered proposals for agreement? To put it another way, what is the deadline for an agreement to be reached? Can the Minister confirm that, if the worst comes to the worst, the UK or any other member state will have the right to veto the proposals? I sincerely hope that that scenario will not come about, but if a member state used a veto, where would that leave the framework for financing the EU? Is there a fall-back position of annual negotiation of the EU budget? I hope he can provide us with answers to those questions. If not, I hope he will undertake to write to me.

Richard Spring: I was about to move on to our policy, so I thank the hon. Gentleman for pre-empting me.
	The Government claim to be a leading advocate of CAP reform. According to the Paymaster General, the Chancellor has
	"told Finance Ministers that it would be wasteful and inefficient to increase spending on current Commission programmes that do not match the European Union's economic reform priorities and in some cases, such as the common agricultural policy, work against them."—[Official Report, 15 June 2004; Vol. 422, c. 704.]
	Since the debacle of 2002, the Government have had some success in achieving reform, and we welcome that. However, the CAP results in artificially high prices for consumers, harms the interests of third world producers and leads to low incomes and red tape for farmers. My party has long campaigned for its reform, and the recent decision to break the link between farm subsidies and production is good news. CAP reform must now be taken further, and cross-compliance conditions should be reduced. I would welcome a commitment from the Minister that that process is under way.
	British farmers must be given the freedom to produce for the world marketplace. We will therefore press for the full decoupling of subsidy from production across the EU and for an end to trade-distorting export subsidies in all appropriate cases. Our first target will be the appalling waste of £600 million of taxpayers' money in subsidising tobacco production annually will be our first target.
	We support the new single farm payment and press for it to be implemented with a minimum of bureaucracy and red tape. We will simplify the rules on cross-compliance and work for the return of more local and national control over agricultural policy, and we will stop the gold-plating of European legislation by British officials in the Department for Environment, Food and Rural Affairs.

Richard Spring: The hon. Gentleman and I do have something in common, as it would be the minimum.
	On structural funds, I again welcome the Government's approach. I agree with their policy of taking back control of structural funds. More national control over those funds would enable us to target them where they are most needed and to reduce the bureaucracy that surrounds their use. Philip Bradbourne MEP, Conservative spokesman on regional policy in the European Parliament, summed up our view as follows:
	"It is no surprise to me that the funds have yet again not been signed off.
	With ten years of dodgy accounts, including €5.3 billion going unused into Commission coffers from the Regional Aid Budget in one year, devolving grant aid back to Member States seems the only viable solution to an ongoing problem.
	This would allow British Ministers to properly determine where and how this money is spent."
	However, I believe that the differences will begin to show on Lisbon and international aid. The Lisbon agenda's economic objectives can only be supported, but economic reform is proceeding slowly on some matters and is frankly non-existent on others. I appreciate that the Government acknowledge that. The Prime Minister has taken the trouble to recognise it every year since setting out the Lisbon process. In the 2003 Treasury assessment of progress on Lisbon, his foreword admitted that
	"there remains a daunting amount to be done . . . Reform on this scale is never easy."
	In the 2004 assessment, he claimed:
	"We have made significant, but not sufficient, progress . . . we need to go further to meet the standards being set by our competitors elsewhere in the world."
	The 2005 report was published last month. The Prime Minister commented that
	"we need to go further and faster."
	The Government produce many fine words on Lisbon, and have done so since the agenda was first agreed five years ago, but little or nothing gets done. I welcome the fact that José Manuel Barroso, the new European Commission President, has presented a programme to re-energise the Lisbon process. It is vital that national Governments get a grip and push ahead with economic reform, on which the EU's future prosperity relies. Ministers pay lip service to Lisbon while eroding the UK's competitive position at home through ever increasing burdens of taxation and red tape.
	I want to consider aid. It is essential to make more effective use of the money that is currently spent multilaterally. There is a strong case for increasing national control over the aid funds currently spent by the European Union. In 1990, 70 per cent. of EU development aid went to the world's poorest countries, but that has now fallen to 52 per cent. Half the EU aid budget is spent on middle or high-income developing countries. That cannot be the best use of our overseas aid, which should help the poorest people in the world. To its credit, British aid does that; European aid, in many respects, does not.
	The former Secretary of State for International Development Secretary, the right hon. Member for Birmingham, Ladywood (Clare Short) agrees. She said that
	"anyone who knows anything about development knows that the EU is the worst agency in the world, the most inefficient, the least poverty-focused, the slowest, flinging money around political gestures rather than promoting real development."
	I believe that the EU should commit itself clearly to devoting the great majority of its budget to the poorest countries and the most impoverished citizens. We should not tamely accept the status quo. Britain should set an example and press other member states to follow it. I call on the Government to publish a detailed annual assessment of all EU aid expenditure, describing Britain's involvement, the procedure for monitoring each project and an assessment of the results.

Chris Bryant: I thank the hon. Gentleman for allowing me to intervene before he perorates, if there is such a verb. He makes the point that others have made in similar debates, that the majority of international aid budgets should go to the poorest countries. However, does he accept that, in some instances, such as support for the Palestinian Authority or in the Balkans, some of policies that we in this country tried to pursue ended up with commitments that the EU met on our behalf?

Richard Spring: I understand the hon. Gentleman's point, but there are many mechanisms whereby the EU can deal with political and economic development in, for example, the Palestinian Authority, including Euromed agreements, which are helpful. I also believe that, in such a process, some assistance can be given. However, I think that he would agree that poverty and all that flows from it is the challenge of international aid giving in the 21st century, and that we should focus on that more than anything else. The problem is that the EU has not been efficient in doing that either managerially and functionally or in terms of the principles that underlie the aid programme. We handle these matters better in this country, and if that could be replicated in the European Union, it would not be the source of so much criticism.

Richard Spring: I could not agree more with the hon. Gentleman. We all agree about giving aid to the poorest, and the governance of the countries involved is crucial in that regard. There is no point in giving substantial sums of taxpayers' money to the poorest if it is being skimmed off and not reaching them. The institutional underpinnings for economic development and human rights in some of those countries certainly needs to be improved, and there must be a linkage between that and aid. On the hon. Gentleman's point about wasting money on some futile exercise in creating a foreign and defence policy under which we would lose our national control of such matters, I agree implicitly with what I believe he was saying: it would be absurd. I can assure him that when we are in government in a few weeks' time, that will certainly not happen.
	I should like to conclude by saying a few words about the Commission's proposals for a new own resources decision and its plans to scrap the UK rebate. Hon. Members will know that member states' financial contributions to the EU are based on the provisions of the own resources decision. The UK's contribution is adjusted by the rebate secured by Lady Thatcher, she of blessed memory, at Fontainebleau in 1984—

Gwyneth Dunwoody: I am grateful to the hon. Gentleman for allowing me to intervene. If the UK was unable to obtain a suitable arrangement whereby it retained exactly the same size of rebate, would he—if he were in government—cease to pay into the Community budgets those amounts of money over and above the agreed sum? Can he make that clear?

Richard Spring: I can assure the hon. Lady that this situation will not arise—I am confident, and I return to what will happen in a few weeks' time—because such will be the clear message from the British Government on these matters that it will be known that any attempt to move beyond this will be firmly and utterly rejected.
	Most recently, the Financial Secretary stated:
	"In terms of the Commission proposal for a new Own Resources Decision, the Government's view is that the proposals are unrealistic and unacceptable. The continuing inefficiencies and inequities on the expenditure side of the budget, and the resulting unfairness of the UK position, mean that the abatement remains fully justified and is not up for negotiation."
	But these are all words. The Commission's proposals are still on the table. Nothing seems to have been achieved.
	Recently, there have been worrying reports that the Government have secured a deal with European leaders to postpone negotiations on the rebate until after the general election. Why is this? What have the Government got to hide? It seems to me that the only possible reason for putting this off until after the election is that the Government are preparing for yet another possible surrender of British interests in Europe. I hope not. It may well be that Britain, holding the EU presidency, may have to take the leading role in resolving this issue, if, as seems likely, Luxembourg is unable to secure agreement by June.
	In the unhappy event of Labour winning the election, British taxpayers will be landed with a bill not only for the black hole in the public finances, but potentially, although I certainly hope not, for the loss of the rebate. The Conservative party is as totally and absolutely committed to defending the rebate as the last Conservative Government were to winning it in the first place.

Doug Henderson: Many of our colleagues in the House probably think that the relevant documents are somewhat esoteric. I am not one who would say that they are necessarily completely wrong on that matter, but, even if they are esoteric, that should not diminish their importance. I rather think that the issues contained in those documents and the policy outlined in the Government motion are central to the important debate that the country will have on the European constitution and, perhaps one day, on the euro itself.
	There are more fundamental issues in those documents as to the size of the European Union budget and how the budget is spent than in all the constitutional changes, which I have always seen as methodological. I do not see them as fundamental to how the EU runs and what it does. Not just in Britain, but throughout the EU, people always say, "What are we going to get out of it?" In a way, we are all to blame in that respect, and I concede that I am as guilty as others, or I certainly was in the past.
	I recall the public discussion in 1975 on whether Britain should remain in the European Union. In a sense, the earlier vote in 1972 on whether we should be in the EU was more honest. The issue got distorted in 1975 by the question of a little bit of money or a little bit of authority here or there. As a consequence, the British public—we are not unique, as other countries also have this approach—thought that the case for the European Union was wholly dependent on how much money we could get out of the organisation by belonging to it. Before the nationalist parties pursue their amendment, they should think a little more carefully about that. I shall perhaps mention later the importance of the EU to Scotland and Wales. We need to be cautious, however, about arguing for the European Union on the basis of how much money we get out of it.
	In my view, the European Union is about doing things together, not subsidising each other. Clearly, there must be an exchange of resources as different issues are tackled in different eras in the development of the European Union. As I think that the Financial Secretary said in response to an intervention, however, it is not about rich countries cross-subsidising each other so that the poorer parts of Germany subsidise the poorer parts of Britain and vice versa. That makes no sense at all. When considering the EU budget, we need to identify more clearly what are the priorities of the EU. We need to ask what the EU is for as we move forward in the 21st century. Until we do that, our arguments about the financing of the EU will be rather sterile. I shall mention later the context of public opinion, in which finances are important.
	Before the public are asked to judge on the finances, however, they should be aware—we all have a responsibility to encourage that awareness—of what the European Union is. I believe that the most important thing for which the European Union stands is the binding together of European countries to protect, to bring stability and security in Europe and to contribute to world security and stability. That is why I am in favour of the European Union—it is absolutely essential that the countries of Europe bind themselves together, and there is no other organisation to do that.
	The second argument, in my view, is that a large international organisation, which claims to have, and should have, a major security and stability role, cannot do that without having an important economic role, as the two go together. That is why the European Union must have a major economic role, too. That major role does not need to cost a lot of money, however. Some of the things that the European Union does are costly. Stability and security involve costs, but not colossal ones, because most of the contributions in that area are made by individual members. Some countries in the Union might be better at naval interventions, some at troop interventions, and some, in certain parts of the world—for example, the French in Africa and Britain in some other areas—at contributing to aid programmes and so on. A lot of the resources for that come directly from member countries, but those countries cannot work together unless they are bound by as common a policy as possible. We will not get international security and stability at all if the European Union cannot even agree on priorities in a relatively rich area of the world. Therefore, there are costs in relation to security.
	Economic policy can have costs dependent on how it is designed. As long as there is agricultural support, whether in the current common agricultural policy or some other regime, common funds will need to be raised to be disbursed according to rules and regulations agreed by everyone. So there will always have to be discussions about the size of the agriculture budget. Other measures, however—such as the economic initiatives of which, perhaps, a few more should have resulted from the Lisbon agreements—do not involve much cost, apart from a measure of administrative cost. They involve no huge subsidies.
	If the enlargement of the European Union is to fulfil the hope of many of us throughout the House that the countries that entered in the last wave will establish values and standards similar to those in existing EU countries, and will aspire to the same economic conditions—if they are to be brought into the house, as it were—there will be some costs to the rest of us. As one who represents a relatively poor part of the United Kingdom, I can say that there will be costs even to areas such as the north-east of England. The structural-fund regime that we in the north-east may have expected in the past cannot continue for ever, because of other important priorities in some of the new EU countries.
	Some may ask, "What is the point of our being in the EU if we in Tyneside are not getting the deal that we used to get?" They should bear in mind the importance to Tyneside's electrical and manufacturing industries not just of inward investment following active participation in the EU, but of defence contracts for such things as aircraft carriers, which are largely dependent on European security and stability. I do not believe that those contracts depend solely on NATO, although I am a strong supporter of NATO; I think that, in today's world, the EU must play a major role.

Chris Bryant: As my hon. Friend said, his area—like mine—has received considerable support from structural funds and from the EU. Perhaps he will also point out that by allowing greater economic prosperity in some eastern countries in the new, enlarged EU, we are helping them to compete in the bargain basement and thereby to deprive areas such as his and mine of jobs.

Doug Henderson: That is absolutely true, but when considering the economic consequences of Latvia, Poland or the Czech Republic joining the EU, we should bear in mind the opportunity that it gives the British economy to trade with them at a higher level in future. Some may say that that is pie in the sky, but that does not apply to trade flows between Britain and Portugal and between Britain and Spain. There has been a vast increase in activity in both directions, but to our advantage in many respects. If I were speaking from the Dispatch Box, I would check the figures before making that assertion, but I think it is broadly correct.
	There are many other spheres in which we must act together, which I think are important to democracy and civilisation in Europe and which involve minimum cost. Costs are involved in asylum and border policy—another important issue—but if we are to have public support in the west of the European Union, the people in the west must be satisfied that the same standards of asylum and border control obtain in the east. If some of the eastern countries cannot fund those standards at present, there must be a degree of payment transfer in the short and, possibly, the medium term. Many important things that the EU does, however, do involve minimum cost.
	Members are bound to mention aid, and they can make that as big an issue as they want. Of course aid involves cost, which must be kept in reasonable proportion—although I support a common European policy on some aspects of aid. I am involved in the sugar regime because of constituency interests in the chocolate industry. I think that it would be wrong to restructure that regime without considering the consequences for the various poorer countries that are affected. If the European Union decides to restructure the regime—which I think it should—it must take account of those consequences. The process will not work if everybody in the EU is bound by the new sugar regime but not by the aid regime. So it is important to take common action within the EU on this issue and I strongly support doing so, although I recognise that there has to be limits. It is a question of bargaining with the other countries and of looking at what is acceptable to public opinion across Europe.

Doug Henderson: I thank my hon. Friend for his intervention, with which I partly agree. The EU needs to decide the borders of the territory within which a common aid policy is to be implemented. Such borders will be moveable, depending on world events. For example, there is a need sometimes to be involved in, say, Bosnia, and it is perhaps worth considering funding such undertakings from a security budget, rather than from the aid budget.
	I want such money to be audited effectively and spent well. I know from past examination of such matters that it has not always been spent well, which is why, often, the auditors will not sign it off. But that issue is separate from the question of whether we should spend such money; rather, it concerns ensuring that—if we do spend it—it is spent properly and that there is proper accountability. I hope that my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) agrees that we need to draw that distinction.

Doug Henderson: Of course I would not, and as I tried to say in response to my hon. Friend the Member for Glasgow, Pollok, this issue must be tackled. There is a need to improve the EU's auditing process and its financial planning, but that is an argument not for getting rid of the EU or for curtailing its activities, but for ensuring that, once we have defined what its responsibilities and priorities should be, the budgets are fairly tightly geared towards them. That can be done, but such things are more difficult to do at international than national level.
	On the point raised by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), if a local authority were questioned about auditing, there would be discussion and argument among the various political parties and institutions in the city in question as to whether taking serious action against the authority was worth the candle. Hopefully, the answer would be yes, but a lot of negotiation has to take place before such action can be taken. However, I hope that my hon. Friend understands that in the EU, one has to multiply that process by the large number of member countries within it, which makes such discussion and the decision-making process more difficult. I do not say that to defend inefficient procedures or unaudited accounts, which I believe should be dealt with.
	Before finishing, I want to mention a few important aspects of what the EU does that do not cost much money. Technology exchange and university links are significant developments within the EU that can help to bolster our industries. The aircraft carrier provides an interesting example. It is now unthinkable that such a complex and costly project could be developed within one country alone. The aerospace industry needs to look at the broader sphere. Technology transfer can be beneficial not only to the relatively well informed technological nations of the EU nations, but to the less well informed ones. The costs are minimal, but the EU has a fundamental role to play. Those are the arguments that we have to put before the public.

Doug Henderson: I may give way in a few moments.
	The EU has also had an important role to play in respect of human rights. We cannot talk about human rights throughout the world unless there is a system based on human rights within the EU. Again, systems based on human rights do not cost a lot of money, just relatively low administrative costs.
	Environmental issues can be costly if major improvements are being sought in either the private or the public sector, and that applies whether or not those improvements are being implemented at the country level or the EU level. I believe that we have to strike an appropriate balance over funding, but the rules governing power station emissions and all the rest of it must be determined at European level. The only organisation in Europe that is capable of achieving that is the European Union. Many other examples of projects that do not cost much money could be cited.
	If the question is how much money should be spent, the answer is that, in a sense, we can never spend enough. All the issues that I have articulated in my speech—they have also been articulated by Front Benchers and others in the debate—potentially cost money and the amount of money needs to be controlled. There needs to be an ongoing public debate to justify the importance of what the EU does and to gain public support for the funding. We should justify the EU in the same way as we continually justify the importance of the national health service. Very few people argue against the need to finance the NHS, though there may be arguments about the effectiveness of the spending, and we have to make exactly the same arguments in favour of the EU. We need to bring EU budgets to a level that is acceptable to public opinion.
	I ask the Minister to tell us a little more about the timetable for taking the process forward—the hon. Member for West Suffolk (Mr. Spring) asked the same question—and to explain in greater detail what Britain intends to do during its six-month presidency.

Kelvin Hopkins: The success of Ireland is welcome and I have many Irish constituents who agree. However, given that the net contributions from the European Union to Ireland amounted to 5 per cent. of gross domestic product, which in Britain would be more than £50 billion every year, and that Ireland joined the euro at relatively low parity to its currency and had to reduce interest rates, it is hardly surprising that the economy boomed.

Paul Tyler: I understand the point that the hon. Gentleman is making. I was not suggesting that England, or indeed Wales and Scotland, should join Ireland and benefit—simply Cornwall.
	At present, there is a clear plot to undo some of the good work that the right hon. Member for Suffolk, Coastal (Mr. Gummer) and I agree is going on in some parts of the United Kingdom. The Library briefing shows that some real economic progress is beginning to come through from the objective 1 process. GDP per capita in Cornwall, for example, is up from 70 to 72.6 per cent. of the EU average in just two years. That is more than the whole of the previous six years. The situation is similar in other objective 1 areas although, of course, we all started from a low base and the improvement is painfully slow. To pull the plug on the objective 1 process in the period between 2007 and 2013 would deal a devastating blow to our economic and employment activity rates just when they are showing signs of sustained progress.
	Unfortunately, UK Ministers constantly bad-mouth such programmes. In the debate in the House on 15 June last year, the Minister for Industry and the Regions said that she wanted
	"to get away from the stifling effects of Commission bureaucracy on structural funds projects."—[Official Report, 15 June 2004; Vol. 422, c. 747.]
	However, Members from all the objective 1 areas know only too well from our contact with the local communities, local authorities and their partners that the problem is not the bureaucracy in Brussels, but the bureaucracy up the road in Whitehall. We constantly face that problem. I accept that there is a trade-off because, of course, the bureaucrats say that they are monitoring and auditing everything that is going on, but to complain about the bureaucracy in Brussels is completely misplaced in this respect.
	As a result of what is now proposed, there is a well-founded suspicion that the Chancellor has set his sights on the repatriation of regional support funding programmes, not so much to save taxpayers' money, but to gain control of the direction of such investment, first, to concentrate it where it can be of political benefit to the Labour party—regretfully that clearly will not be in Cornwall—secondly, to limit the Treasury's match fund commitments and, thirdly, to avoid longer-term investment in specific areas of the UK.
	The Chancellor and his ministerial colleagues have done nothing to remove our fears, and almost all MPs from objective 1 areas have expressed serious concern about the complete lack of realistic guarantees. The objective 1 group in the House has, for example, pointed out that the EU programme lasts for seven years, but that the Treasury can promise only three years of assistance, with no commitment to comparable match funding, as we have experienced in phase 1. So are the savings sought by the Government, within the package and implicit to what we are considering now, real and realistic?
	Incidentally, I find it odd that the Conservative spokesperson, the hon. Member for West Suffolk, assumed that we could do nothing about all this. He even seemed enthusiastic about what the Chancellor is up to in respect of objective 1 areas. It happens that Cornwall is a Tory-free zone—indeed, as are most of the other objective 1 areas—but to deny the useful contribution that objective 1 status has made to our economy and so on seems extraordinary.
	My colleagues and I have met officials from the appropriate directorate of the Commission in Brussels who believe that such savings are neither real nor realistic. Unless the Chancellor is prepared to preside over a sharply reduced impact on regional development in the UK and is successful in persuading the majority of the other 24 member states to do the same, this attempt at a unilateral breakout is clearly doomed. Meanwhile, the effect of the Government's refusal to compromise is delaying vital decisions and leaving UK local authorities and their partners in a state of dangerous confusion—they simply have no idea what will happen or when—and the potential for avoidable waste and dissipation is immense.
	We seek an explicit reassurance from the Minister. What will happen and when to such regional funds? What guarantee is he prepared to make? Frankly, given the Chancellor's obstinacy, there is little prospect of finding any solution to the problem before the end of June. If he thinks that he can bully his opposite numbers into agreeing with him during the British presidency, many MEPs, from all parties, are simply convinced that that is wishful thinking.
	A great deal has already been said about the CAP. As I made clear at the outset, the CAP is the real meat of the EU budget. The 2002 deal, which was referred to earlier, struck between the French and German Governments has resulted in a continuation of many of the least satisfactory and least sustainable aspects of CAP expenditure. Reference has been made to the sugar and tobacco regimes, both of which are clearly undesirable in the medium to long term. The sugar regime is not finalised and could still be revised much more effectively.
	I recall that the then Minister for Europe, now the Leader of the House, whom I shadow, said that the CAP's
	"quick reform is imperative, and it will not bear the weight of enlargement without it."—[Official Report, Westminster Hall, 16 April 2002; Vol. 383, c. 121WH.]
	We now have enlargement, yet the CAP is not fully reformed. That is unfinished business.
	Where were the United Kingdom Government when the latest Franco-German CAP deal was struck? Did our Ministers, let alone the Chancellor, fight for effective restraint on that huge element of the overall Brussels budget? They seem to have been conspicuous by their quiet acquiescence.

Paul Tyler: I entirely agree with the right hon. Gentleman, who speaks as a former Minister. The transition process is not easy. He has a big agricultural community in his constituency, as do I, so he will agree that if the process had been started earlier—I am not blaming him and his Government for that—things might have been easier, especially given what has happened over the past 10 years with bovine spongiform encephalopathy and foot and mouth. The livestock industry has suffered a lot of blows, although that might not worry him as much as me. The change process is not painless and will take time.
	The European regional development fund to which I was referring is frankly small beer alongside the CAP. Only a small improvement to the application of the CAP would be effective, which is why those of us who represent objective 1 areas are worried, nay apprehensive, about the way in which the Chancellor seems to be targeting the development and structural funds rather than the CAP. We are far from convinced that the Government have either identified the right targets for reform and retrenchment, or secured the necessary allies to achieve that.
	Anyone who doubts the wisdom of carefully extending the application of qualified majority voting should take a hard look at the way in which only a few Governments of member states have managed to stymie radical reform of the CAP and the common fisheries policy with the use of their vetoes. Surely such reform requires a consensual approach rather than unanimity.
	Budgetary discipline is the subject of another of the papers before us. To a non-accountant, the paper seems to be dangerously complacent, and that was reflected by the exchanges between the Conservative and Labour Front-Bench spokesmen. The mechanisms might seem to be "an efficient tool" to those in Brussels, but the outcomes suggest otherwise. As hon. Members have said, the European Court of Auditors has refused to sign off the EU accounts for the 10th year. That is outrageous, as the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) has reminded us several times this afternoon.
	Surely the UK Government should concentrate on achieving an effective audit trail in all member states for all EU funds. Until then, it might be more reasonable to insist on a freeze on the budget as a share of gross domestic product in the Union. That would allow a real increase, but only in line with the growth of the EU economy. I find it difficult to understand why that explicit statement—using both a carrot and stick—is not deployed more effectively by European countries that are worried about the lack of effective budgetary discipline. It should surely be said openly—it should have been said in the famous letter of 2003—that until the EU gets a firm grip on its budgetary disciplines, there should be no question of an increase in overall expenditure.

David Heathcoat-Amory: If the hon. Gentleman is now so keen on budgetary discipline, why was it that no Liberal Democrats, or their allies, on the European Convention tabled or supported amendments to improve the scrutiny process or to strengthen budgetary discipline in the European constitution?

Paul Tyler: I cannot answer that question because I do not know the details. I can tell the hon. Gentleman that my colleagues on the Economic and Monetary Affairs Committee have been making a specific proposal to link any consideration of any increase in the overall budget to the issue that is before us. That is specific within the European Parliament. I cannot speak for the convention, but the European Parliament has the same sort of responsibility for the scrutiny of the budget, but perhaps not to the same degree as we in this place in terms of the UK budget, and perhaps not as much as the hon. Gentleman and I would like, and initiatives have been taken. I agree entirely that fraud continues to disfigure the reputation of the EU.
	The lack of clear management accounts is clearly an obstacle to the scrutiny of spending. It seems odd that there is not a specific linkage in the Government's proposal, and in the motion, between that and the issue of the overall budget.
	I move on briefly to the issue of a general correction mechanism and the own resources system. The two papers, and the Government's response to them, raise fewer issues of principle, at least to my mind, but it is always that the devil may be in the detail. The Minister may be able to tell us that there are still some difficulties. I think that there is unanimity across the House that we must stand firm. That is why I find it unfortunate that the amendment to which the Welsh nationalists have put their name would seem to undermine that position. I hope that the amendment will not be carried.
	Enlargement has been mentioned several times. The Government, and the Conservative Government before them, have been enthusiastic about enlargement. I have always believed that the reinforcement of budgetary control should have preceded the expansion to 25 rather than followed it. Deepening should have been given precedence over widening. However, we have to live with the world that we now have.
	The Commission is now saying that the larger budget that it is seeking is necessary to consolidate and continue the process of enlargement and to achieve better cohesion with the economies of the new entrants. We have yet to see how it can persuade other Governments, including our own, that it has not wished the end without supporting the means. As has been said, the Lisbon agenda is also extremely relevant.
	The core issue should not be only how much but what for. We have the famous 2003 letter to the then President of the Commission to which there were six signatories, including the UK Government. It was remarkable in that it made no direct reference to CAP reform. It assumed that the Franco-German deal was a done deal and could not be reopened. That was a grave mistake. It was extraordinary that it did not make any direct reference to better financial management and audit supervision.
	This morning, in The Guardian, Lord Hattersley quoted Mr. Gladstone, who I suppose I could call my right hon. Friend. He made a sensible and sane statement some 120 years when he said:
	"Things are done best by those who believe in them."
	To us, the Chancellor seems all too anxious to carve up the most cost-effective EU regional programme while failing to insist on CAP pruning and meaningful audit tracking of waste. We just wish that he would believe more in the EU and less in his own omniscience.

Gwyneth Dunwoody: The connection between politics and taxation is a direct one. Parliaments exist not only to collect taxes, but to decide the priorities for those who are involved in how those taxes should be spent. There is a direct relationship between elected Members, in terms of the decisions that are taken, that is emphasised by the fact that in a Parliament such as this, we are constantly presenting ourselves for re-election. We say to the electorate, "We want your taxes for these purposes. If we do not fulfil them, we shall offer ourselves for re-election and you may then decide whether we have fulfilled the programme that we offered you at the last general election."
	It is therefore extraordinary that we should be debating, with the assistance of some extremely good reports by the European Scrutiny Committee, an arrangement that for a period of well over 10 years has not been audited properly and has resulted in the collection of considerable sums of money from the taxpayer. That money has been spent on a series of initiatives, some of which have rather strange priorities, but the Commission is still not capable of demonstrating in a clear or transparent manner how it controls its own finances. I asked my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) a question about what he would do if a local authority could not demonstrate how it had spent taxpayers' money and which projects it had supported for the simple reason that the principles of accountability are the same whether the organisation is local, national or international. It is extraordinary that year after year, we have debates, sometimes attended by very few Members of Parliament—although that fact is of practically no importance—in which we consistently agree that we need more transparency, better audit trails and more control over the way in which the Commission makes decisions. We decide, however, not to take action that week or the week after. We might even fail to take action in a few months' time, but people need not worry because we will do something eventually.

Mark Hendrick: Is my hon. Friend not aware that the European Parliament has a Budgetary Control Committee? Indeed, even though the auditors have not signed off previous budgets, the European Parliament is made up of directly elected Members from this country and 24 other member states who can stop the budget in its tracks and have occasionally threatened to do so?

Gwyneth Dunwoody: I spent four and a half jolly years in the European Parliament, and I can assure my hon. Friend not only do I know about the tricks and games of that Committee but I know that the European Parliament's powers, which could be used to control the Commission, are rarely used, because they are blunderbuss powers. There has only been one attempt to discipline the people in charge, so my hon. Friend's argument is singularly unconvincing.

Kelvin Hopkins: Is not the reality that Ministers in Governments across Europe and, indeed, in the European Parliament do not want to kick up too much of a fuss for fear of being seen as non-communautaire and guilty of shaking the whole arrangement to pieces?

Gwyneth Dunwoody: I am afraid that I cannot answer for any Minister, thank God. It is many years since I was a Minister. However, I would like to say something about one or two important matters.
	I have listened carefully to my hon. Friend the Minister, and I accept that he and the Chancellor are strongly committed to the securing of a sensible arrangement. We should welcome the fact that they will not go above 1 per cent.—indeed, they should sing it from the rooftops as loudly as possible. Nevertheless, I have one or two questions for the Minister. If for any reason, our position is not accepted by the other member states after the election, what will be the attitude of the United Kingdom Government? Will it be the same attitude adopted by the present Administration, who will not contribute a sum over the amount specified by the Chancellor? If so, how do we intend to maintain that position? Is it true that in moving to a different arrangement for the payment of regional funds we will insist that the community provides a buffer and a suitable amount of cash to ensure that UK regions that receive support will not lose it without a targeted and tapered programme?
	Is it not possible for the Minister to say that if we are required, at the end of another 12-month period, to accept accounts that are not qualified or audited properly, a demand for extra money for a larger budget and a change in the way that the United Kingdom retains its rebate, we—the United Kingdom—will take action to protect the sums that are going into Community organisations?
	It is all very well to say to the taxpayers of this country that, in comparative terms, we are dealing with a small sum of money. I noted in the papers before us the wonderful phrase that it is only 1 per cent. of budget, whereas, after all, the individual states are spending 48 or 49 per cent. more. Whatever the size of the budget, what happens to that money should concern us. We know that in certain cases, and certainly in relation to overseas development, money is not only squandered, but frequently lost. We know that in relation to many of the individual institutions, there is open corruption and frequently very little accurate accounting for the sums of money that are put into various developments. Beyond that, we also know that as a Parliament, for the first time almost in 800 years, we are being required to do something that would be unacceptable in any other sphere. We are being asked to tax the people of this country, to use that money by transferring it to a much larger organisation and to be unable to assure ourselves that those sums are being correctly, honestly and effectively spent. How long can that state of affairs be allowed to continue?

Adam Price: I beg to move amendment (a), leave out from "resources system;" to end and add
	'and reaffirms the need to continue EU structural funding.'.
	It is an honour to move the amendment in my name, and a rare privilege for Plaid Cymru and the Scottish national party. The issue is vital to west Wales and the valleys, and we wanted to focus on the structural funds and regional policy. May I say to the hon. Member for North Cornwall (Mr. Tyler) that it is always difficult to knit an Opposition amendment into a paragraph that eulogises the Government, and I am sorry if I failed on this occasion. We thought it was important to give hon. Members an opportunity to divide on an issue that is of such great importance to our communities before the general election and before decisions are made. That is the intention of the amendment.
	Regional policy is important not just to my community; it goes to the heart of the European Union that we are trying to create. Implicit in the Government's policy is the notion of the renationalisation of solidarity. Solidarity is an important component of the notion of European citizenship that we are trying to create. We are grateful to the hon. Member for West Suffolk (Mr. Spring) for pointing out that the spectre of Thatcherism, if not the spirit of Mrs. Thatcher, still haunts us.
	In the experience of my community, European regional policy provided a valuable safety net through the terrible, devastating years of Thatcherism. It provided practical value to our communities in the form of individual projects, and was also a beacon of hope because it showed that another way was possible—that there was a different model for society and the economy, and that the neo-liberal model that was on offer at the time could at least be ameliorated by European regional policy, and we are grateful for that.

Adam Price: If I were to respond, I would be going rather wide of the subject that we are debating. In the past few days, a report from Sheffield Hallam university showed that only half the jobs that were lost in heavy industry, mining and steel have been replaced through inward investment in manufacturing, so they sadly do not make up for the terrible policy of breakneck de-industrialisation under the Tories.
	We were fortunate in those days that we at least had the safety net of European aid. That is why it is so important that we uphold the principle of an EU-wide regional policy. I have no appetite for the return of a Tory Government. I have no appetite for the present Government's dalliances with neo-liberal policies either, but I am certain of one thing: there is more economic security for our communities if we retain the principle of EU-wide regional policy.

Adam Price: I agree with the first part of the hon. Gentleman's intervention. His point is well made. What we want in all our communities is not charity. We do not want permanent dependence on any funding source, whether at central Government or European level. We want help to help ourselves. The Government are right to stress that in their statements on regional economic policy. Developing endogenous potential—indigenous potential—is the way forward. [Interruption.] "Endogenous" if I were giving an economic seminar; "indigenous", perhaps, in the Chamber. That has always been the key component of European regional aid as well.
	The startling example of the Republic of Ireland was mentioned earlier. Since about 1987, it has had an incredible record of economic growth, partly—not wholly—because of a very successful strategic exploitation of structural funds, and also of the cohesion fund for which it was eligible as a poorer member state.

Adam Price: In the case of Wales, the new figures contradict the hon. Gentleman's point. At this point west Wales and the valleys come beneath the 75 per cent. benchmark for eligibility for the new convergence fund, because unfortunately it is one of the poorest regions of the European Union, even after enlargement. Overall prosperity in Anglesey, for example, is 53 per cent. of the average for the 25 EU member states. We are always being told that the UK is one of the richest member states and that it has the third or fourth largest economy in the world, so it is incredible that an island in Wales has half the average EU prosperity, even with the inclusion of the enlargement countries, which had to cope with 40 years of communism.

Adam Price: I hate to have to correct the hon. Gentleman again, but on 25 January EUROSTAT published the latest regional GDP figures, which show that the GDP of west Wales and the valleys from 2000 to 2002 was 73.8 per cent. of the average for the 25 EU member states. That is less than the 75 per cent. threshold, which is the basis on which eligibility for the convergence fund will be determined.

Wayne David: The hon. Gentleman has quoted the EUROSTAT figures, which do not take into account the most recent GDP figures from central Government. If the recent figures were taken into account, they would show that the GDP in west Wales and the valleys has risen considerably.

Adam Price: That is all the more reason why the decision to award convergence fund status should be made now. West Wales and the valleys has a window of opportunity to achieve the highest level of European aid for seven years until 2013, as a result of which we would probably qualify for another seven years of transitional funding. We are discussing 15 years of the highest level of aid for my community and for the hon. Gentleman's community, which is why we urge the Government to ensure that a decision is made in June at the European summit meeting.

Adam Price: I am discussing the concrete fact that money is on the table for the hon. Gentleman's community and for mine. As elected Members from west Wales and the valleys, it is our responsibility to make the case so that Wales gets that money.

Adam Price: Precisely. We must obtain agreement to ensure that we obtain full value from the money that is available to us. At the moment, we qualify for the highest level EU aid, but we will not get that money if the UK Government push the decision into their own presidency or beyond it into 2006. I am not the only one to take that view: when the Welsh Local Government Association met the European Commission recently, the Commission told it in clear terms that it is in Wales's best interests to ensure that a decision is made now.

Angus Robertson: May I warn my hon. Friend against the view that structural funds are "abstract"? Part of my constituency is in the highlands and islands, which was turned down for objective 1 status on the basis of flawed figures from the UK Office for National Statistics. The people of the highlands and islands know that regional support and objective 1 status are not abstract, but fundamental to the economic regeneration of many places.

Adam Price: I should emphasise that the highlands and islands will qualify for the second tier of regional funding, which the Commission propose and which the UK Government oppose. Parts of east Wales will qualify for the regional competitiveness and employment fund, and trans-national projects in rural development areas, which have been valuable to rural communities throughout Wales and Scotland, will be lost to the UK. Our communities have a lot at stake, and it is our responsibility to make the case to the UK Government.
	The UK Government's position is obviously to impose a 1 per cent. ceiling, which will preclude current levels of regional funding, and to pursue the policy of re-nationalisation to which I have referred. If the decision were pushed from June to December—I am grateful to the leader of my party for picking up my notes—new figures, which will push west Wales and the valleys above the 75 per cent. threshold, would be a realistic prospect. In that case, we would lose out on this historic opportunity to achieve a 15-year basis for long-term economic planning in west Wales and the valleys.
	One of the benefits of European regional policy is that it allows regions at least seven years in which to develop a long-term strategy, whereas the Government can make only a three-year commitment.

Adam Price: I disagree with the Government, who have made their position clear. They see no future for structural funds in our communities, but structural funds are critical in my area, which is the point of the amendment.
	On the UK abatement, which the hon. Member for North Cornwall (Mr. Tyler) mentioned, I am an agnostic because its effect in Wales has been entirely negative. Wales has not had the full benefit of European structural funding, and some rural development programmes and the compensation arrangements for farmers in Wales were affected negatively by movement in the sterling exchange rate. We did not receive that funding, partly because the Treasury would have lost out if we had had more receipts and there would have been less for the UK abatement. The operation of the abatement so far has not always been to the benefit of Wales.
	My principal reason for drafting the amendment was to emphasise a principle. I agree with what the Commission has said in the past few days about the need to protect the notion of EU-wide structural funds. Last week, Commissioner Hübner outlined the case for EU structural funds and said that the seven-year programming periods allow regions to think strategically and to plan for the long term. That will not be possible if we have a repatriation, because we will then have only the three-year period of a spending review to plan financially.The way in which structural funds have operated has allowed capacity to build up at local and regional levels. Local ownership and regional capacity-building has been welcome.
	A third element is the raft of inter-regional co-operation, experience sharing, and networking, which have been positive and part of European regional policy from the beginning. According to the Commission's proposals, 4 per cent. of structural funds will be devoted to that element. That is critical, not just in the economic sphere but in spreading innovation, because one of the great virtues of the European Union is its diversity. We would lose that element if we lost structural funding, particularly the transnational programmes, in the UK. It is vital to continue to have structural funding available.
	Empirical data show that structural funding, particularly objective 1 funding, has been successful in most objective 1 regions. EU-wide regional policy was first proposed in the late 1970s because of a fear that member states had failed to promote a convergence agenda. Contrast that with experience in objective 1 regions whose economic growth in 1988–2000 was three times faster than in Europe as a whole. That is true in the Republic of Ireland, Spain and parts of Portugal, which had positive economic growth records during that period. The one exception is west Wales and the valleys, which, despite achieving objective 1 status, does not have a good growth record so far.

Adam Price: This is not the time to go into detail about the operational difficulties of the west Wales and the valleys objective 1 programme, but there have been significant issues with the slow start to spending and what some people see as an overly bureaucratic and complex approach, which can be contrasted with the more strategic approach taken in other economic regions. West Wales and the valleys region has seen a relative economic decline, contrary to the positive experience of other objective 1 regions. The available data show a further slide and it is vital that we have a second opportunity. We must learn from the failures of the past few years.

Adam Price: That is a good point. As I tried to argue a few moments ago, there is a powerfully enabling attitude and culture within the Commission on regional policy. It is all about grass-roots, bottom-up development to enrich and promote indigenous capacity. That has been powerful, but Wales could learn from the experience of Ireland and its identification of key strategic weaknesses in the Irish economy. Sectoral strategies and looking forward 15 years in terms of new technologies when they were on the distant horizon were key elements in Ireland's armoury and part of the reason for its powerful success. A similar strategic approach has been taken in some of the Atlantic arc regions, such as Portugal.
	We can learn the lessons, but the central issue is the need for a decision. West Wales and the valleys region is eligible. We have a second tier offer for disadvantaged regions, but the 15-year window of opportunity must be grasped. We must press the Financial Secretary on whether the Government will put the interests of Wales first at the European summit in June, or will allow that opportunity to slip through their fingers. It would be a terrible waste of a massive opportunity to regenerate our communities and would impact on other funds such as the European agricultural fund for rural development. Projects such as Tir Gofal, Tir Mynydd and Tir Cynnal, which have been important in many rural communities, are at risk because of the Government's intransigence. It is vital to have an early decision in June, as timetabled, so that west Wales and the valleys can benefit from their eligibility. That is the simple message behind the amendment.
	This is another historic opportunity for us. We did not think that we would have to have a second chance. It should not have been necessary because we should have had a successful programme that would have lifted our communities out of poverty. However, we are debating the matter day because of the failure and incompetence of the Labour Government in Cardiff. We should not be punished twice because of their incompetence and failure adequately to represent us in Brussels.
	We are among the poorest communities in the European Union. I am not proud of that and I want to change it. I do not want to go, cap in hand, to London or Brussels. I want a future for my community, as Ireland has. Ireland lifted itself out of poverty and it is incumbent on the Government to ensure that communities that successive Governments have failed—I accept that the fault lies not just with the Government because it is a legacy of the devastation of the previous Administration—have the opportunity to help themselves. We need the funding and, from the bottom of my heart, I appeal to the Financial Secretary. It means so much to our communities. We need to mount a cross-party campaign. Will the Minister please heed the voices from Wales? We need a decision for our communities now.

Chris Bryant: My hon. Friend is enticing me into a debate on trade instead of EU finances. Let me cite the example of the disaster relief work in which different countries around the EU have been involved. In the Caribbean, for instance, countries such as France, Germany, Belgium and Holland will often work only with the individual islands with which they have historical links, whereas a more concerted effort between all the different countries would probably be far more effective. I still hold to the view that although, in the main, we should try to increase the percentage of EU aid that goes to the poorest countries—I respect the work that the Government have been doing on that—it will still be necessary to consider the mathematical equations of poverty in arriving at the decision on where the money should go.
	We have heard an excessive amount of ideology this afternoon, including the hyper-inflated peroration of the hon. Member for East Carmarthen and Dinefwr [Hon. Members: "Jealousy."] It might be envy, but it could not possibly be jealousy. The hon. Gentleman should not be ideological about structural funds. Ultimately, I want to ensure that the economy in my constituency is resuscitated after the decades of difficulties that we have experienced. The recent report by Sheffield Hallam university is a rude awakening for those who look at the south Wales economy and see, in many areas, greater growth than there is across the rest of the UK and significant improvements in the unemployment level, which in my constituency is only marginally ahead of the UK average. That is all well and good, but the truth remains that in other areas with objective 1 status jobs have been replaced much more significantly and effectively than in south Wales. That is partly why one in five people of working age in my constituency is on incapacity benefit. I am glad that the Government are working to address that. The issue of structural funds is not ideological—the point of principle is that we must ensure that we have programmes in place to resuscitate those communities.

Kelvin Hopkins: My views on the common fisheries policy are also well known.
	Minister after Minister in the Department for International Development has complained about the inefficiency and corruption in the aid budget, the fact that it is misdirected, that money goes missing and that it does not work. The Department for International Development is a model that other member states could follow. Whatever else we do in the world through our free trade policy in arms, we do a good job on aid. I therefore suggest that we should repatriate the aid budget to member states. We should not do it unilaterally, but propose it as a sensible way forward. We could then direct aid to the countries that we believed needed it, for example, those in sub-Saharan Africa.
	It is clear that structural funds will not operate to our advantage in future and that we will be bigger net contributors. Given that many poorer countries have joined the EU, it is sensible and natural that the richer countries such as Britain make net contributions to them. I hope that our Government will replace what is lost in European structural funds with various national and regional funding, which would ensure that areas of the country do not suffer by the loss of European funding.
	I hope that, when regional funding goes to parts of Britain, we might see notices with a little red rose and the words, "donated", "given" or "allocated by Britain's Labour Government", instead of the little circle of yellow stars on a blue flag. I stress to my hon. Friend the Financial Secretary that previous Labour Governments have promoted such a regional policy. I did some work on regional policy funding when I was at the Trades Union Congress and in the 1970s, it genuinely worked. It reduces inequalities in growth, living standards and employment between regions. We should have more of that and there should be a more substantial national budget, too. We should not simply leave everything to markets because they do not work without redistribution.
	We are considering substantial changes and it behoves all of us who take a critical standpoint to propose something that will work instead of what we have. On page 104 of the document that is before us, the Commission examines the possibility of a GNI—gross national income—based system, whereby countries would donate according to their relative prosperity. The Commission notes that
	"advantages of such a system would be that it would be simple and easy to understand, and gross contributions would correspond closely to member states' relative prosperity."
	That is a sensible way forward. Sadly, the Commission rejects it. We should go on pressing that case. We should get rid of some of the distorting, inefficient and corrupt systems and replace them with a system based on relative prosperity whereby we donate to a budget on which the poorer countries draw. Rich countries such as Britain would therefore be net contributors and the poorer countries that join would be net recipients. That should be accompanied by a strong internal regional policy.
	I have made the case many times in the Chamber and in European Standing Committee B and I believe that it is sensible. However, we will get nowhere by tinkering at the margins and hoping that nobody notices that we are not changing anything much. We must propose a coherent, comprehensive and radical alternative for the future of Europe. I envisage our going forward on the principles that I outlined.

Stephen Timms: We have had an interesting debate that has shown the significance of the next financial perspective for the future direction of the European Union. I have been heartened by the wide support expressed for my contention that a 1 per cent. budget is realistic and affordable, and—with reform and reprioritisation—more than enough to meet fully the needs of an enlarged EU.
	The continued inefficiencies and inequities on the expenditure side of the EU budget and the resulting unfairness of the UK position mean that the UK abatement remains fully justified. It is not up for negotiation; we are not proposing changes to the way it is calculated. Without the abatement, UK contributions since 1995 would have been at least 12 times more than those of countries of comparable wealth. We reject also the Commission proposals for a general correction mechanism, and for a 34 per cent. increase in the EU budget at a time when member states are having to take pretty tough fiscal decisions about their own spending at home.
	A number of Members asked me about the timing for decisions on all this. Negotiations so far have shown increasing support for the position that the UK, among a range of member states, has taken. I think we will gather more support as the negotiations progress, and I am confident that we will secure our priorities in the best interests of the whole EU.
	Specifically on the question of the timetable and the deadline asked by the hon. Member for West Suffolk (Mr. Spring), we are happy to work towards a June political agreement—that is, at the end of the Luxembourg presidency—but getting the right deal for us is more important than hitting any particular date, so we are certainly ready to take this work forward in our own presidency if no deal is agreed in June.
	The hon. Gentleman gave the impression that ground had been lost since last year's debate, but I do not think that that is true at all. Indeed, the reverse is the case and we have gathered growing support for the position we have taken. He referred to some figures and suggested that the Commission, after the initial proposal of about 1.26 per cent. of EU GNI, came forward with an even higher figure of 1.3 per cent. That is not correct. I think he has misunderstood some figures—I do not blame him for misunderstanding some of the detail—that appear on page 167 of the bundle of documents. They indeed include the figure of 1.3 per cent., but he needs to know what that is.
	That figure refers to a maximum budget drawn from the suggestions of all the member states in responding to the Commission's proposals. So, those proposals come from member states, not the Commission. The same table shows the minimum budget drawn from the same source, which is 0.82 per cent. of EU GNI. We see there the suggestions coming from the member states, which lead to a range of budget values between 0.82 and 1.3 per cent. That underlines the fact that our 1 per cent. package is perfectly credible in view of the concerns of the member states, as well as affordable.
	There has been some discussion of the common agricultural policy. An agreement was reached at the October 2002 European Council, which provided for a slight real-terms cut in CAP expenditure. We regard those ceilings as maximums, not targets. We want to continue to work to ensure that CAP spending comes below the ceilings. My hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) will agree with last July's trade and investment White Paper, where we said that
	"there is no logical reason why agricultural products must be treated in a different way from industrial goods. Our long-term goal will be to abolish progressively, as for industrial goods, all trade-distorting agricultural subsidies".
	The hon. Member for North Cornwall (Mr. Tyler) asked where we were when CAP reform was being debated. Of course, we were, as always, playing a key role in an important decision, which was breaking the link between tax-funded subsidies through the CAP and production. That decision on decoupling was a big step forward.
	There has been a good deal said in the debate about the future of EU regional policy. Our approach to EU structural and cohesion funds would provide for greater solidarity and better effectiveness by focusing funds on the least well off member states, where they would have the greatest effect. My hon. Friend the Member for Luton, North (Mr. Hopkins) suggested that only previous Labour Governments had taken this position, but we are strongly committed to a vigorous regional policy. However, three quarters of all regional regeneration funding already comes from this Government, rather than from the EU, so we have made the commitment that if our reform proposals are agreed, domestic regional policy spending will be increased so that the UK's nations and regions do not lose out.
	I say to the hon. Member for East Carmarthen and Dinefwr (Adam Price) that we pay €1.60 for every euro of structural funds we receive. On any scenario, the amounts coming to the UK are bound to be less in future, but his argument seemed to be that it is necessary to keep EU structural funds in place to protect his constituents from the danger of a future Conservative Government. The logic is that he should be urging people to vote Labour to avoid that disastrous outcome.
	The hon. Member for North Cornwall made an interesting speech that was undermined for me by his suggestion that the Government are not interested in Cornwall. Anyone who has seen the benefits of objective 1 funding in Cornwall knows that this Government have made the case for Cornwall and promoted the programme whose benefits are being experienced.
	My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) made an excellent speech, setting out the value of the EU and the need for budgetary discipline within it—not assuming that every need that arises requires extra EU spending. As he said, we gain enormous benefits from our EU membership. I agree with what today's Financial Times quotes Sir Digby Jones as saying—that we should
	"exploit the 'very pro-British' mood in Brussels".
	He also criticises the Tories' policy on Europe as
	"potentially damaging to British interests".
	He characterised it thus:
	"Saying, 'well, I'm out of here', whether it is on separate issues or the whole thing".
	Sound budget management, clear focus on objectives and priorities—those can only improve the value of the EU's work. I commend the motion to the House.

Paul Tyler: On behalf of my right hon. and hon. Friends, I too would very much like to congratulate those of our colleagues who do such valuable work for the trust. I am also grateful to the hon. Member for Dartford (Dr. Stoate) and his colleagues for providing us with a very good explanatory memorandum.
	I want to draw attention to one important point. Given that the parliamentary contributory pension fund has been in operation for some 40 years, one would hope that lack of knowledge about it will be a diminishing problem, but it is clear that a number of would-be beneficiaries might continue to be unaware of the trust's nature and remit. It is very welcome that the trustees have recently taken the initiative of publicising the nature of their work and its applicability to certain circumstances. The memorandum describes as an "oversight" the fact that there have been no resolutions since 1994 for the purposes of regularising regular or one-off payments, and I hope that the oversight has been put right not only for the current year. Perhaps someone can explain whether this debate will have to be an annual event, or whether, as a result of these motions, we have given permanency to the new arrangements.
	I say again that we are grateful to those Members of the House who give their time and expertise to what is obviously an extremely valuable exercise.

Phil Woolas: I add the Government's support for these motions and echo the comments of the shadow spokesmen by thanking, on behalf of the whole House, the Members' fund and in particular its chairman, the right hon. Member for Hitchin and Harpenden (Mr. Lilley). I also thank my hon. Friend the Member for Dartford (Dr. Stoate) for moving the motion so eloquently and for explaining what is a very complex matter in simple terms, so that we could all understand it. These funds are important to their recipients, many of whom are elderly and vulnerable. It is also important that we do things properly, and the House will want to thank my right hon. Friend the Leader of the House for ensuring that the time requested by the trustees for this debate was made available.
	This is one of those moments when we can reach a consensus, and with that in mind I am happy to support the motions.
	Question put and agreed to.
	Resolved,
	That this House resolves that pursuant to section 4(4) of the House of Commons Members' Fund Act 1948 and section 1(4) of the House of Commons Members' Fund Act 1957, in the year commencing 1st October 2004 there be appropriated for the purposes of section 4 of the House of Commons Members' Fund Act 1948:
	(1) The whole of the sums deducted or set aside in that year under section 1(3) of the House of Commons Members' Fund Act 1939 from the salaries of Members of the House of Commons; and
	(2) The whole of the Treasury contribution to the Fund in that year.

Mr. Deputy Speaker: With the leave of the House, I will put motions 6 and 7 together.
	Motion made and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated legislation),

Mr. Deputy Speaker: With the leave of the House, I shall put motions 9, 10 and 11 together.

Ordered,
	That, at the sitting on Wednesday 9th March, notwithstanding the provisions of paragraph (3)(a) of Standing Order No. 54 (Consideration of estimates), consideration of the Estimates set down for that allotted half day may be proceeded with, though opposed, for three hours, when proceedings shall be interrupted unless previously concluded; and on the interruption or conclusion of the proceedings, as the case may be, the Speaker shall proceed to put the questions which, under the provisions of paragraph (5) of Standing Order No. 54 and of paragraph (1) of Standing Order No. 55 (Questions on voting of estimates, &c), would otherwise fall to be put at the moment of interruption .
	Ordered,
	That, at the sitting on Thursday 10th March, the Speaker shall put the Questions necessary to dispose of proceedings on the Motion in the name of Mr Peter Hain relating to Support for Members who have chosen not to take their seats not later than three hours after their commencement; such Questions shall include the Questions on any Amendments selected by the Speaker which may then be moved; proceedings may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.

Ian Gibson: I am delighted to have this opportunity so early in the evening to raise the issue of stem cell research in the United Kingdom. As many Members will remember, we had several debates on this issue and thereby changed the legislation to allow such research to be carried out.
	In a recent interview, Sir John Chisholm, chief executive of the part-Government-owned company QinetiQ—it was formerly the Defence Evaluation and Research Agency, which essentially was a collection of secret, military-based research laboratories—called for an audit of the innovation potential of large Government purchases, in order to encourage Ministers and civil servants to think more imaginatively about procurement of new technologies and products. He believes that the Government's record in supporting science and science-based industry is falling somewhat short. For example, liquid crystal displays constitutes a £10 billion industry, yet little of it is exploited in the UK. How do we make science and raw innovation reap their economic benefits?
	Although the UK has the ideas, it often lacks the enterprise to follow them through to market. The fear is that we will miss out on automatic breast scanners and many other new and exciting innovations in science. That is an example of the sort of circumstances that could pertain to stem cell research in this country.
	The key issue is not really about the use of embryonic stem cells, but about creating medicines to treat some of the most debilitating diseases afflicting our population—Alzheimer's, motor neurone disease, Parkinson's, muscular disorders and, indeed, cancer. It looks as though the first products will be trialled in a few years' time. There is some argument, but a lot of hope, about that. Those products are likely to be based on adult stem cells or manufactured immortalised stem cells.
	People often imagine or assume that projects emerge from basic research right away and move into the clinic for the benefit of patients. That, of course, is absolute nonsense. The translational research/scale-up/pre-clinical development stages all have to be carried out first, which can take some considerable time. Although there are few projects ready for the clinic today, many are ready to enter those earlier stages, and the costs associated with such translation steps are measured in millions of pounds. The assertion that there are no suitable projects is dangerously wrong and could be based on a misunderstanding of the steps required to bring the therapy to the clinic.

Ian Gibson: I thank my hon. Friend and I have to confess that I am also a product of the excellent Edinburgh university system after a sojourn of some six years in that august city. As my hon. Friend knows, I often played at Easter Road stadium and at Tynecastle in the good old days before the huge wages and other problems that football now faces arose. The crowds were well behaved and it was unlikely that a chief executive would have run on to the pitch to the endorse the crowd's "Let's be having you" and all the rest of it. I must say, incidentally, that Chelsea fans were excellent this week, shouting back at the Norwich fans, "You're going down with the soufflé", which I thought was rather apt in respect of the individual who had perpetrated an event at half-time a few weeks ago.
	Applied research and development projects are conducted and judged in a very different way from hypothesis-driven research. In consequence, it will not solve the lack of funding to give a large new sum to the MRC for applied research, as it is simply not set up to administer such big projects. The best solution is the stem cell foundation, set up by Sir Christopher Evans, which has attracted much interest in high places in government at Whitehall. The idea is to bring together the brightest and best across the relevant fields and skill sets. Those with experience in managing the project selection process, pharmaceutical and biotech companies have an invaluable role to play. The stem foundation will have the ability and the desire to pick winners and back them all the way through to the therapies being offered to the patients—our constituents. We must act swiftly if we are to capture the fruits of British research for the UK. We are already being overhauled by other countries, including China and Korea, in this sector and the risk of brain drain to the US is increasing rapidly.
	On the other hand, Professor Pedersen of Cambridge university told me recently that he came to this country to work on stem cells almost immediately following the Government's decision to allow such research to take place here. He says:
	"As a stem cell refugee"—
	that sounds like a novel breed—
	"recently arrived in the UK, I am often asked whether I will return to my native California, now that they have voted to provide three billion dollars in funding for stem cell research. I answer that 'no, I am not ready to return to the US'. In my honest opinion, there is no guarantee that any State in the USA has the ability, or for that matter, even the intention, of providing treatments for UK patients with currently incurable diseases. There is simply too much opposition within the current administration to stem cell research to guarantee such an outcome."
	A recent UN declaration is designed to prevent stem cell technology in its 191 member states and it was good to hear our Secretary of State for Health say that that declaration was "non-binding" and would make "no difference" to the position of stem cell research in the UK. We have put some £16.5 million into stem cell research and set up a stem cell bank in this country, so we are ahead of the game. Several UK scientists are doing world-class research, including at the Roslin Institute, another fine place in Edinburgh, where Dolly the sheep was created. Sterling work is being carried out there, particularly on motor neurone disease.

Tam Dalyell: Normally, I do not muscle in on debates raised by my hon. Friends, but as there is a lot of time I trust the House will forgive me if I make a short speech.
	First, I must tell the Minister that her words tonight will be scrutinised by many informed and concerned people. The House of Commons may be pretty empty, but the Hansard report will go around university departments. I hope that the Minister will be able to say that stem cell research has the endorsement of the British Government and, in particular, that the decision will be made by the Department of Health, and no other Department.
	Secondly, as a Scot, may I ask how much discussion there has been with the Scottish Executive? The whole funding of the research is something of a grey area between the Treasury, the Department of Health and the Scottish Executive. I make no criticism of that. To the best of my knowledge, the system works pretty well but I would like confirmation that the Department has been properly consulted.
	There is something else that bothers me. In the academic world in which we now live, there is enormous pressure to publish, publish, publish and to be accountable to this, that or the other. My hon. Friend the Member for Norwich, North (Dr. Gibson) will know of the dramatic and unusual case of a researcher who published nothing for eight long years, but at the end of the eighth year he published and was awarded his second Nobel prize. That researcher was Fred Sanger. With his prestige, he was in a position to do that, but let us for heaven's sake be patient in this field. Let us create a situation where there is not such a drive to show how much has been published and to judge people's work not on its quality but, alas, on quantity.
	It is important that funding is provided for people who want to carry out long-term research without their being pressurised to produce. That is a matter of cardinal importance. What Governments can do about it may be rather complex, but the problem must be tackled.
	Finally, if anybody has doubts about stem cell research they should go, as we all do in our constituencies, to Arthritis Care. They should see people who suffer from dementia or Alzheimer's. That will make the case for allowing the research to go forward. I hope that it is in no way threatened in our country.

Melanie Johnson: It is with pleasure that I rise to answer the Adjournment debate initiated by my hon. Friend the Member for Norwich, North (Dr. Gibson). He has raised an important matter. It is also a pleasure to see that two other Members are in the Chamber, including the Father of the House. It is good to know that even at this hour people are interested in discussing the matter. My hon. Friend has worked energetically to ensure that science and technology are up in lights before the House, and I know that he takes a close interest in stem cell research.
	I have listened carefully to the points made by my hon. Friends the Members for Norwich, North and for Linlithgow (Mr. Dalyell). Before responding, as we have the luxury of a little extra time, I should like to remind the House of the regulatory and financial framework that the Government have put in place. I think that will help to demonstrate our firm objective to make the UK the envy of other countries in having a strict but enabling climate to foster this important field of research.
	We want the best possible medical research to take place in the UK, so we have put in place a widely respected regulatory system that may license specific research activities involving embryos if it is satisfied that that is necessary to undertake the research. That has allowed scientists in the UK to derive new embryonic stem cell lines using spare embryos that are not suitable for use in IVF—in vitro fertilisation—treatment. Over recent years, the House has held mature debates on that subject.
	Both my hon. Friends mentioned the Roslin Institute in Scotland. With the birth of Dolly the sheep at the institute, the ethical challenges of human cloning left the pages of science fiction and became stark reality. However, we confronted those challenges, and fulfilled a Government manifesto commitment, when we were one of the first countries in the world to ban reproductive cloning under the Human Reproductive Cloning Act 2001. Anyone attempting that procedure in the UK will face prosecution with a possible 10-year prison sentence and a limitless fine. The strength of what we have done is shown by the fact that at the same time we recognised the enormous potential benefits that therapeutic cloning and stem cell research may bring.
	It does the House great credit that in 2000, after careful and wise debate, new regulations were passed to permit the use of the techniques of cell nuclear replacement—or cloning—to develop embryonic stem cells. The regulations mean that embryonic stem cell research takes place in this country under the strict control of the Human Fertilisation and Embryology Authority. The use of therapeutic cloning techniques will allow UK scientists new methods to develop cures for serious conditions such as diabetes, motor neurone disease, or arthritis and dementia, to which my hon. Friend the Member for Linlithgow referred, and many others.

Melanie Johnson: When I recently had the pleasure of appearing before the Science and Technology Committee, chaired by my hon. Friend the Member for Norwich, North, I expressed the view, on my own and the Government's behalf, that we have considerable faith in the work that the HFEA has been doing and in its role. People are always challenging the authority's work, sometimes through the courts, and there are indeed some challenges on which it would be wrong for me to comment. It is a difficult field, but the regulatory structures and frameworks are working well. The HFEA has an important role in maintaining trust and credibility in the structures that the House has put in place.
	With the regulations that we have passed, UK scientists have the potential to use the new methods to develop cures for serious diseases. We are convinced that therapeutic cloning holds enormous promise for new treatments for serious degenerative conditions that are currently incurable, such as Parkinson's disease, heart disease and diabetes, which kill many millions of people a year. That was one of the contributory factors in a lot of the lobbying carried out by many organisations before the debates that took place in 2000 and 2001. That lobbying had a considerable influence on hon. Members, who rightly listened to the voices of the people who were dealing with the very difficult situations of millions of patients in this country and abroad.
	In May 2004, the Government created the world's first stem cell bank: the UK stem cell bank will act as a repository for all types of stem cells and ensure that they have been ethically and appropriately sourced. The bank also helps to fulfil our obligations to ensure that embryos will be used only for research into serious disease and when no other sources of material are available.
	In August last year, the HFEA granted its first licence for therapeutic cloning to a team at Newcastle university—in fact, that licence was first of its kind in Europe—and in February this year, a second licence to study motor neurone disease was granted to the same team at the Roslin Institute, where Dolly the sheep was created. So the UK cloning story has come full circle, with a display of confidence in the UK regulatory system from our own stem cell researchers.

Melanie Johnson: I suspect that my hon. Friend understands very well the difficulty of keeping things simple. We certainly try to do our best—I am sure that civil servants do, too—to ensure that things are as simple as possible, but that is not always easy, when dealing with lawyers, sometimes including parliamentary draftsmen, in my experience, although I shall probably receive many brickbats for saying so in the House. I am sure that such things may be particularly difficult with this issue, to be fair to those who draft our legislation. Obviously, all hon. Members on both sides of the House have an obligation to ensure that such things are kept as simple and uncomplicated as possible.
	As my hon. Friend refers to the links with Scotland and Edinburgh, I should tell him that my noble Friend the Under-Secretary of State for Health in the other place deals with many of the day-to-day issues that relate to stem cell research, and I will draw his attention to the points raised about the links with Scotland and the Scottish authorities. Of course, although we are the lead Department, we are only one of a number of Departments, and the Department of Trade and Industry is responsible for things such as research council funding, and I gather that the Foreign and Commonwealth Office also promotes UK stem cell research abroad. So a range of different Departments is involved. Of course, we try to keep in touch with colleagues in Scotland as closely as well can at all times.

Tam Dalyell: The Scottish scientific community appreciates the work of Lord Sainsbury, and indeed that of his officials. May I also make it clear that, if there are any brickbats of parliamentary draftsmen, they do not come from me? I was taught a very early lesson when I asked Harold Macmillan—the Prime Minister when I was first elected to the House of Commons—a question, and he replied by saying that he would send the parliamentary draftsman to explain how difficult it was; so for the past forty-two and a half years, I have known the difficulties of parliamentary draftsmen.

Melanie Johnson: I am grateful to my hon. Friend for his question. I was going to come to spending in an moment, but I can do so now if that suits hon. Members.
	In the 2002 spending review, the Government allocated £40 million to a major cross-Government investment in stem cell research. That will be made available in 2004–05 and 2005–06, with the following allocations: the Medical Research Council will receive £26 million; the Economic and Social Research Council, £1.8 million; the Engineering and Physical Sciences Research Council, £1.2 million; the Council for the Central Laboratory of Research Councils, £400,000; and the Biotechnology and Biological Sciences Research Council, £10.6 million.
	In January this year, the Department of Trade and Industry announced that it will contribute £4.9 million in funding to three specific projects in stem cell research. Those projects are led by the companies NovaThera, Stem Cell Sciences and ReNeuron. The respective aims of the projects vary from identifying factors that control the reproduction and differentiation of stem cells to developing high-throughput screening for drugs and stem cell technology for neurological diseases. The projects range in size from £2.2 million up to £4.5 million, with between five and eight collaborators in each consortium. The DTI funding for each project ranges from £1.2 million to £2.1 million. Although seven of the collaborative partners are based in London or the south-east of England, the other partners are spread throughout the UK—two are from the east midlands or the east of England, three from the north of England, three from Scotland and one from Wales.
	In the 2004 spending review, the Government announced £10 billion of spending on UK science over the period 2005 to 2008. In the new science spending allocations for the spending review announced today, the UK funding for biotechnology, including stem cell research and DNA-based medicines, via the Biotechnology and Biological Sciences Research Council, will rise to more than £1 billion over the next three years. There will also be an increase over the next three years to £1.5 billion for the Medical Research Council, including more than £440 million for clinical research into diseases such as those related to mental health, stroke, cancers and diabetes. The DTI said today that the Government's spending on UK science will be the largest ever investment in British science by any Government and that it will rise to more than £3.4 billion a year by 2008. We believe that that is a testament to our commitment to make the UK the best place in the world to do science.

Rob Marris: I realise that not all the research funding to which my hon. Friend refers comes from her Department. Can she tell me, either now or later, how much of the funding is spent on blue skies research—pure research? I appreciate that politicians sometimes find that difficult to justify. There is a circular argument when people ask why we fund such research because we have to try to explain that there is no reason to fund it, in one sense, because if there was such a reason, the research would no longer be pure. However, pure research is vital to a modern economy. Can she give us an idea of the balance of research funding?

Melanie Johnson: I do not have a figure to hand that I can give my hon. Friend. However, I certainly accept—I am sure that Government do, too—the point that both he and my hon. Friend the Member for Norwich, North have made about research. Research for research's sake is often a starting point for the development of technologies that are useful for our society, so we must continue to support and respect that. We support that general argument in both word and deed.
	We are funding the UK stem cell bank, which is based at the National Institute for Biological Standards and Control. As I said, the bank is the first of its kind. It will hold all types of stem cells as a resource for researchers. It was launched on 19 May 2004 and will hold embryonic, foetal and adult stem cell lines. The bank recently received good manufacturing practice—GMP—accreditation following an inspection by the Medicines and Healthcare products Regulatory Agency, thus allowing therapeutic stem cell lines to be stored and distributed. In December 2004, the world patent office gave the bank the status of an international depositary authority under the Budapest treaty, which means that it can act as an official storage and distribution centre for patented stem cell lines.
	In November 2004, the Reproductive Genetics Institute, which is based in London and Chicago, announced that it would establish a stem cell bank in London with 18 embryonic stem cell lines that were created in Chicago. The cells are suitable only for research because they are not of a sufficiently high standard for use in patients. We support and encourage all activities that might turn stem cell research into real treatments. It is worth noting that the NIBSC bank alone will be able to store and supply clinical grade material for therapeutic use. We think that the work going on there is one of several jewels in the crown of stem cell research.
	My hon. Friend the Member for Norwich, North touched on the question of what is happening at UN level. As I have said, the UK has been totally opposed to human reproductive cloning and we were one of the first countries to ban it. At the same time, however, we have allowed therapeutic cloning. I endorse his point about the United Nations debate. I understand that more action will take place in the UN tomorrow. It is likely that a non-binding political declaration on cloning will be adopted. The UK has voted against the declaration thus far because it has called for the prohibition of all cloning, including therapeutic cloning. We have made it clear that that declaration will have no effect whatever on UK stem cell research. I gather that the matter has to go before the General Assembly—that might be happening tomorrow—so there are further stages to be completed.
	I was a little surprised that my hon. Friend did not mention the East of England stem cell network. It was set up with funding from the East of England Development Agency. It brings together key organisations involved in the important field of research, including the Cambridge University Hospitals NHS foundation trust. Given his interest in both East Anglia and stem cells and bioscience, I am sure that he will support and promote the network.

Melanie Johnson: I declare an interest in all things connected with the east of England as an MP for that region. I thought I would give my hon. Friend an opportunity to mention his ongoing interest. I gather that the network will be launched at the Sanger institute in Hinxton, Cambridge, tomorrow.
	My hon. Friends the Members for Linlithgow and for Norwich, North mentioned the UK stem cell foundation, about which there have been several recent reports. I understand that its specific purpose will be to fund the translation of stem cell preclinical research into clinical trials and possible treatments. As my hon. Friend the Member for Norwich, North said, it takes a long time for an initial idea to reach a stage at which it can be applied to change people's lives every day. One of the foundation's stated aims is to ensure that the UK remains at the vanguard of regenerative medicine. I understand that the principal backer of the proposal is Sir Chris Evans of Merlin Biosciences. He proposes a public-private partnership involving researchers, funders, entrepreneurs and members of the pharmaceutical industry to fund stem cell clinical trials. Plans for the proposal are well advanced.
	Before my hon. Friend the Member for Norwich, North rises to point this out, the board of the body has already been assembled, and I believe that he is a member. Other illustrious members include Sir Richard Branson, Sir Robert May, Sir Richard Sykes, Lord Winston, Trevor Jones, and Professor Roger Pedersen, who has already been mentioned. Sir Chris proposes that the UK Government should commit funding to the foundation over a 10-year period, with match funding from the private sector. The Government are happy to consider any proposals from the UK stem cell foundation with interest. Lord Warner is meeting the foundation later this week to discuss matters of mutual interest.

Brian Iddon: Perhaps my hon. Friend will address the ethical and moral issue. I have said that there is a difference between countries in Europe, but there is also a difference between people in this country. There are still some people who are annoyed by stem cell research and embryonic nuclei being used. How do the Government see things progressing? How do we handle attempts to prevent research from going ahead on ethical and moral grounds?

Melanie Johnson: I think that we have settled quite a good deal of that through debates in this place. We do not see the need to reopen many of those debates. It was clear on a free vote that the ratio was about 3:1 in favour of the regulatory arrangements that we have, both the permitting ones and the banning ones. That makes it clear that we understand the value of therapeutic cloning arrangements and the use of stem cells in that context. We are completely opposed to reproductive cloning. The House has made clear its view. The majority on a free vote indicated clearly how strongly Members are in favour of the arrangements that we now have in place.

Brian Iddon: We did have eyeball to eyeball contact in the House. However, real new issues are arising. For example, there is the development of embryo cells to produce organs for what is called a save-your-sibling procedure. That creates new tensions other than the therapeutic cloning that we have debated. That was the major issue then. There are many other avenues now. We have debated these matters, but I do not think that they are over by a long shot.

Brian Iddon: We are having one heck of a time debating human embryology and the changes that we would like to see. I have just escaped from the Select Committee and the debate is continuing. The Committee is now in its seventh hour on the report, so no one must hold their breath.